Final answer:
Interest on a loan to purchase land to be developed and resold is not deductible and must be added to the cost of the related capital item, as it is part of the cost of development rather than an immediate business expense.
Step-by-step explanation:
The interest expense that would not be deductible and must be added to the cost of the related capital item is on a loan to purchase land to be developed and resold (Option C). This is because the interest is considered part of the cost of developing the land for resale, rather than an immediate business expense that can be deducted. In contrast, the interest on a loan to purchase an automobile might be deductible if the automobile is used for business purposes. Similarly, the interest on a home mortgage might be partially deductible if part of the house is used as a business office. Finally, interest on a loan to purchase office equipment is typically deductible as a business expense.