Poole Company,a calendar year taxpayer,incurred $589 of long-distance telephone charges in December 2019 and mailed a check to the telephone company on January 4,2020.If Poole is a cash basis taxpayer,it reports a $589 tax deduction in 2020.

Question

Quizplus · Accepted Answer

A cash basis taxpayer reports income and deductions in the year they are actually paid or received. Since Poole Company paid the telephone charges in January 2020, the deduction is reported in 2020.

Poole Company,a Calendar Year Taxpayer,incurred $589 of Long-Distance Telephone Charges