Keagan Company,a calendar year taxpayer,incurred $1,490 of long-distance telephone charges in December 2017 and mailed a check to the telephone company on January 4,2018.If Poole is an accrual basis taxpayer,it reports a $1,490 tax deduction in 2018.

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Under the accrual method, expenses are recognized when incurred, not when paid. Therefore, Keagan Company should report the $1,490 long-distance telephone charges as a tax deduction in 2017, the year in which the expense was incurred, not when the check was mailed out in 2018.

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