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How much business interest can Armitage deduct

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Question - Armitage Inc. has earned gross receipts of about $10 million for the past 3 years. This year it earns gross receipts of $10,600,000. Armitage has $5,000 of business interest income, $400,000 of adjusted taxable income and $200,000 of business interest expense.

a. How much business interest expense can Armitage deduct?

b. Assume the same facts except that Armitage's gross receipts for the past 3 years have averaged about $30 million. How much business interest can Armitage deduct?

Reference no: EM132977754

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