Exercise $17-21($Algorithmic$)($LO$.1)$

In the current year, Nighthawk Corporation, a calendar year C corporation, has $$4,540,000$ of adjusted taxable income and $$136,200$ of

business interest income. Nighthawk has no floor plan financing interest. The business interest expense for the year is $$1,816,000.$

a$.$ Assume that Nighthawk has average gross receipts for the prior three$-$year period of $$40,000,000.$

Determine Nighthawk's current$-$year deduction for business interest.

$

b$.$ Assume that Nighthawk has average gross receipts for the prior three$-$year period of $$21,000,000.$

Determine Nighthawk's current$-$year deduction for business interest.

$