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What is the amount of interest expense that sally can deduct

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Problem 1: On June 30, 2019, Sally, who uses the cash method of accounting and is not subject to the business interest deduction limitations, borrowed $25,000 from a bank for use in her business. Sally was to repay the loan in one payment with $2,000 interest on December 30, 2019. On December 30, 2019, she renewed that loan plus the interest due. The new loan was for $27,000. What is the amount of interest expense that Sally can deduct for 2019?

Reference no: EM132774557

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