The following are the requisites for the interest expense to be deductible, except:Select one:a.The indebtedness must be connected with the taxpayer's trade, business or profession.b.The interest must have been paid or accrued during the taxable yearc.There is indebtedness may be entered either verbally or in writing.d.The indebtedness must be that of the taxpayer.Clear my choice
Question
The following are the requisites for the interest expense to be deductible, except:Select one:a.The indebtedness must be connected with the taxpayer's trade, business or profession.b.The interest must have been paid or accrued during the taxable yearc.There is indebtedness may be entered either verbally or in writing.d.The indebtedness must be that of the taxpayer.Clear my choice
Solution
The correct answer is c. "There is indebtedness may be entered either verbally or in writing." This is not a requisite for the interest expense to be deductible. The form of the agreement (verbal or written) does not affect the deductibility of the interest expense. The key factors are that the debt is connected to the taxpayer's trade, business, or profession, the interest was paid or accrued during the taxable year, and the debt is that of the taxpayer.
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