Vernon is a cash basis taxpayer with a calendar tax year.On November 1,2013,Vernon entered into a lease to rent a building for use in his business at $4,000 a month.On that day Vernon paid 18 months rent on the building,a total of $72,000 $4,000 * 18 months).How much may Vernon deduct for rent expense on his 2013 tax return?

Question

Quizplus · Accepted Answer

As a cash basis taxpayer, Vernon can deduct expenses in the year they are paid. Since he paid for November and December 2013 rent in 2013, he can deduct $8,000 ($4,000 per month for 2 months) on his 2013 tax return.

Vernon Is a Cash Basis Taxpayer with a Calendar Tax