Witmold Ltd., a subsidiary of a U.S. corporation, received an 8% loan from the U.S. parent company of $6 million on December 2, 2007 to purchase manufacturing equipment. The company started making loan payments of $72,500 per month on January 2, 2008. On July 15, due to a problem collecting from its major customer, the company borrowed an additional $600,000 from the U.S. parent. This loan was a 2% loan and was repaid 14 days after receipt when the customer paid its accounts receivable.
Because of the above problem, the company did not make its August to October payments on the loan but began making payments again in November. Witmold Ltd. plans to catch up and make its August to October payments sometime in 2009. The total interest expense booked to the financial statements for 2008 was $458,808 for both loans.
In November 2008, Witmold's controller realized that, due to thin capitalization restrictions, the interest deduction on the loan for tax purposes would be limited. As a result, on November 30, 2008, $500,000 of the loan balance was converted to paid-up capital of the common shares held by the U.S. parent company. There were no other share capital transactions during the year. Witmold's comparative balance sheet for its December 31, 2008 taxation year was as follows:

The amortization schedule for the loan for 2008 was as follows:
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REQUIRED
Compute the amount of interest that the company will be able to deduct for tax purposes for its December 31, 2008 taxation year-end.

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2007 2008 Assets Cash A/R Inventory Fixed assets Total assets Liabilities Accounts payable Loan to parent Equity Retained earnings Common stock Total liabilities & equity $6,200,000 $250,000 300,000 500,000 800,000 1,200,000 400,000 6.600,000 $300,000 $450,000 6,039,452 5,345,300 9 1,260,548 1,754,700 300,000 800,000 S7,900,000 S8,350,000 0273 341112542 725500528 96245409156538 60484 0 099988778888332 655555555555555 4171013998 7520505651 42075319146839 9, 9, 9 8 8 8 8 7 8 8 8 5 2 4. 531 2022 7077 2222022 0000300