In theory let's say a company is giving another company a loan that will have a grace period of 72 months and will allow them to defer any payments for 72 months (essential deferred interest payments without any minimum payments required). I am assuming the accrued interest will be taxed during these 72 months. However, if the company receiving the loan pays back the principal on month 71 then they do not owe any of the deferred interest that was accumulated over the last 71 months. Therefore, will the company that issued the loan be able to use the taxes they paid on the accrued interest they never received as a deduction or credit? Also, what would the journal entries look like when everything is cleared during month 71 as the accrued and deferred interest on each companies' books would have to be cleared (for example purposes let's say its $1000 loan)?