Deductions and Losses: Certain Itemized Deductions10-2314.Brad, who uses the cash method of accounting, lives in a state that imposes an income tax (in-cluding withholding from wages). On April 14, 2008, he files his state return for 2007, paying an additional $600 in state income taxes. During 2008, his withholdings for state income tax pur-poses amount to $3,550. On April 13, 2009, he files his state return for 2008 claiming a refund of $800. Brad receives the refund on August 3, 2009. If he itemizes deductions, how much may Brad claim as a deduction for state income taxes on his Federal income tax return for calendar year 2008 (filed in April 2009)?
PTS:1REF:p. 10-1315.Barry and Larry, who are brothers, are equal owners in Chickadee Corporation. On July 1, 2008, each loans the corporation $10,000 at annual interest of 10%. Both shareholders are on the cash method of accounting, while Chickadee Corporation is on the accrual method. All parties use the calendar year for tax purposes. On June 30, 2009, Chickadee repays the loans of $20,000 together with the specified interest of $2,000. How much of the interest can Chickadee Corporation deduct in 2008?