Question

In the case of a nonbusiness debt, a deduction is only allowed in the year the debt was issued.

a-true
b-false

Answer 1

For nonbusiness debts, you can generally deduct the interest paid on the debt in the year it is paid, not the year the debt was issued.

Step-by-step explanation:

The statement, 'In the case of a nonbusiness debt, a deduction is only allowed in the year the debt was issued' is false.

For nonbusiness debts, you can generally deduct the interest paid on the debt in the year it is paid, not the year the debt was issued. This is known as the cash method of accounting. For example, if you took out a nonbusiness loan in 2021 and made interest payments in 2022, you would deduct the interest paid on your 2022 tax return.