Sanjay took out a loan on November 1, Year 1, for $100,000 to purchase inventory...
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Accounting
Sanjay took out a loan on November 1, Year 1, for $100,000 to purchase inventory for his clothing store, which he operates as a cash basis sole proprietorship. His annual interest rate is 6%. On December 31, Year 1, he pays the $1,000 of interest due for Year 1 and also prepays $3,000 of interest for the first six months of Year 2. What is his deduction on his Year 1 tax return for interest expense?
Group of answer choices
$ 0
$1,000
$3,000
$4,000
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