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INTEREST EXPENSE, DEDUCTION OF INT EXPENSE AND RECOGNITION OF INT INCOME…

- - - - employed in that period in production GI
      - laid out on assets used/held in that period for production GI
    - - Int inc = S4(c) inc
        
        bases if recog of inc = receipt basis obtainable on demand
    - - Int exp = deductible when int is payable
  - - - int inc will only be recog as inc of lender if int has been received/obtainable on demand by lender
- - - - int only deductible when it is due to be pd or pd
      - tax comp has to revised bcox deduction given in YA int is payable
  - - - int inc is deemed to be received by lender on date int is due to be pd by borrower whether or not int has been received
      - int inc is brought to tax in YA int is due to be pd by borrower
      - inc is to be traced back to prior YAs and will be assessed for YA in which int is receivable
      - prior YAs tax comp will need to be revised to acc for additional int inc