Eaton Inc.is a calendar year,cash basis taxpayer.On October 1,2019,Eaton paid $4,800 to a security firm for night-time and weekend security services for the 24-month period beginning with October.Which of the following is true?

Question

Quizplus · Accepted Answer

As a cash basis taxpayer, Eaton can only deduct expenses in the year they are paid if they apply to that year. The $4,800 covers 24 months, so Eaton can deduct $600 for the 3 months in 2019, $2,400 for the 12 months in 2020, and $1,800 for the 9 months in 2021.

Eaton IncIs a Calendar Year,cash Basis Taxpayer