To finance the purchase a new piece of equipment for his business Allan borrowed money from...

To finance the purchase a new piece of equipment for his business Allan borrowed money from his bank paying 5% interest.

Before he has paid off the loan he sells the business and disposes of the equipment. There is insufficient sales proceeds to completely pay off the loan and he still has to pay the interest on the unpaid balance. He cannot claim the interest payments a deduction because his business has ceased.

True

False

Solutions

Expert Solution

The given statements is FALSE because interest which is to be paid on loan is deductible even after the interest payment is made after the business has ceased to exist, and hence Allan can claim interest on unpaid balance as tax deduction according to the tax laws.

The given statement is FALSE

jeff jeffy answered 2 years ago

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