Bart owns 100% of the stock of Octo Corporation, which uses the accrual method. Bart's sister Samantha, a cash- method taxpayer, did some advertising work for Octo in November 2018. In December, Octo received a billing statement from Samantha for $5,000 and paid Samantha the $5,000 in January 2019. Samantha is a calendar- year taxpayer. When may Octo deduct the $5,000?

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Octo Corporation, using the accrual method, can deduct the expense in 2019 when the payment was made, as the related party rule requires the deduction to be taken in the year the payment is made if the related party uses the cash method.

Bart Owns 100% of the Stock of Octo Corporation, Which