Keagan Company,a calendar year taxpayer,incurred $1,490 of long-distance telephone charges in December 2019 and mailed a check to the telephone company on January 4,2020.If Poole is an accrual basis taxpayer,it reports a $1,490 tax deduction in 2020.

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Quizplus · Accepted Answer

An accrual basis taxpayer reports expenses in the year they are incurred, not when they are paid. Therefore, Keagan Company should report the $1,490 deduction in 2019, not 2020.

Keagan Company,a Calendar Year Taxpayer,incurred $1,490 of Long-Distance Telephone Charges