Murray Inc.,a calendar year,accrual basis corporation,accrued $946,000 salary and wage expense at the end of 2016.Murray paid the entire amount of the accrued liability on January 13,2017.Murray can deduct the entire $946,000 accrued expense in 2016.

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Under the accrual basis of accounting, expenses are recognized when incurred, not when paid. Therefore, Murray can deduct the entire $946,000 salary and wage expense that was accrued at the end of 2016, even though it was paid in 2017.