An accrual of a reserve for bad debt expense by an accrual-basis taxpayer meets the standards of all-events and economic performance.

Question

Quizplus · Accepted Answer

The all-events test is met when the fact of the liability is established and the amount can be determined with reasonable accuracy, but economic performance requires the actual incurrence of the expense, which does not occur with a mere reserve for bad debts.

An Accrual of a Reserve for Bad Debt Expense by an Accrual-Basis