Benita incurred a business expense on December 10,2011,which she charged on her bank credit card.She paid the credit card statement which included the charge on January 5,2012.Which of the following is correct?

Question

Quizplus · Accepted Answer

If Benita is an accrual method taxpayer, she can deduct the expense in 2011 since the expense was incurred in 2011. However, if she is a cash method taxpayer, she cannot deduct the expense until 2012 when she paid the credit card statement. Option C is incorrect since she cannot choose to deduct the expense in either 2011 or 2012 if she uses the accrual method, as the timing of the deduction is determined by when the expense was incurred. Option A is incorrect in this scenario. Therefore, the correct choice is only B.

Benita Incurred a Business Expense on December 10,2011,which She Charged