At the end of its taxable year,Gong Company accrued an expense for an account payable to Mexance Inc.Even if Gong and Mexance are related parties,Gong can deduct the accrued expense if Mexance also uses the accrual method of accounting for tax purposes.

Question

Quizplus · Accepted Answer

If both parties use the accrual method, the expense can be deducted by Gong Company as long as it meets the requirements for deductibility under the tax code, even if they are related parties.

At the End of Its Taxable Year,Gong Company Accrued an Expense