Poole Company, a calendar year taxpayer, incurred $589 of long-distance telephone charges in December 2016 and mailed a check to the telephone company on January 4, 2017. If Poole is a cash basis taxpayer, it reports a $589 tax deduction in 2017.

Question

Quizplus · Accepted Answer

A cash basis taxpayer reports expenses in the year they are paid, not when they are incurred. Since the payment was made in 2017, the deduction is taken in 2017.

Poole Company, a Calendar Year Taxpayer, Incurred $589 of Long-Distance