The interest expense of a domestic corporation on a bank loan in connection with the purchase of a production equipment: (2012 Bar Question)

The question

The interest expense of a domestic corporation on a bank loan in connection with the purchase of a production equipment: (2012 Bar Question)

1. A.Is not deductible from gross income of the borrower-corporation;
2. B.Is deductible from the gross income of the borrower-corporation during the year or it may be capitalized as part of cost of the equipment;
3. C.Is deductible only for a period of five years from date of purchase;
4. D.Is deductible only if the taxpayer uses the cash method of accounting.

This question has not been answered yet.