In 2018, A Corp. had gross sales of $100,000,000 and business interest income of $20,000,000. A Corp. had deductible business expenses (other than interest) of $60,000,000 and business interest expense of $35,000,000. A Corp. had adjusted taxable income (adj. taxable income = taxable income without taking into account non-business income, business interest expense, business interest income or NOL) of $40,000,000.
What amount, if any, of A Corp.’s business interest expense deduction is disallowed in 2018?
What would your answer be (i.e. what amount of A Corp’s business interest expense would be disallowed) if instead A Corp. had gross sales of $1,000,000, business interest income of $200,000, deductible business expenses (other than interest) of $600,000, business interest expense of $350,000 and adjusted taxable income of $400,000? A Corp’s gross sales have been $1M for the past 3 years.