Taxation, 2012 Bar — Question 16

MULTIPLE CHOICE

The interest expense of a domestic corporation on a bank loan in connection with the purchase of a production equipment: a) Is not deductible from gross income of the borrower-corporation; b) Is deductible from the gross income of the borrower-corporation during the year or it may be capitalized as part of cost of the equipment; c) Is deductible only for a period of five years from date of purchase; d) Is deductible only if the taxpayer uses the cash method of accounting.

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