Question

George operates a business that generated revenues of $51 million and allocable taxable income of $1.26 million. Included in the computation of allocable taxable income were deductible expenses of $240,500 of business interest and $250,500 of depreciation. What is the maximum business interest deduction that George will be eligible to claim this year

Answer 1

The Maximum business interest deduction to be claim by George this year is $525,300

Step-by-step explanation:

The maximum business interest deduction will be 30 percent of Adjustable Tax income.

Adjustable Tax income = Taxable Income + Business Interest + Depreciation

Adjustable Tax income = $1,260,000 + $240,500 + $250,500

Adjustable Tax income = $1,751,000

Maximum business interest deduction = 30% × Adjustable Tax income

Maximum business interest deduction = 30% × $1,751,000

Maximum business interest deduction = $525,300

Answer 2

Maximum business interest deduction that George will be eligible to claim this year will be $525,300

Step-by-step explanation:

Maximum business interest deduction is 30% of Adjusted Taxable income (ATI)

Adjusted Taxable income (ATI) = 1260000+240500+250500= $1,751,000

Maximum business interest deduction = 1751000*30%= $525300