Tabco Inc., a calendar year, accrual basis corporation, accrued $48,800 wage and salary expense and a corresponding liability at the end of 2020. How much of the accrued expense is deductible in 2020?

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Quizplus · Accepted Answer

Under the accrual method, expenses are deductible when they are incurred. However, for wage and salary expenses, they must be paid within 2.5 months after the end of the tax year to be deductible in that year. Therefore, the amount paid by March 15, 2021, is deductible in 2020.

Tabco Inc, a Calendar Year, Accrual Basis Corporation, Accrued $48,800 Wage