Identify which of the following statements is true.
A)A corporation that accrues compensation payable to an employee must pay the amount within two and one-half months after the close of the taxable year to deduct the amount in the year of the accrual.
B)Accrued compensation that is deductible in the year of accrual is considered to be part of an IRS deferred compensation plan.
C)Accrued compensation not paid within three and one-half months after the close of the corporation tax year is deducted in the year following the accrual.
D)All of the above are false.

Question

Quizplus · Accepted Answer

A corporation that accrues compensation payable to an employee must indeed pay the amount within two and one-half months after the close of the taxable year to deduct the amount in the year of the accrual. This rule allows businesses to deduct accrued expenses in the year they are incurred, provided they are paid by a certain deadline in the following year.

Identify Which of the Following Statements Is True