Tabco Inc., a calendar year, accrual basis corporation, accrued $48,800 wage and salary expense and a corresponding liability at the end of 2016. How much of the accrued expense is deductible in 2016?

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Quizplus · Accepted Answer

Under the IRS rules for accrual basis taxpayers, expenses are deductible in the year they are incurred if they are paid within 2.5 months after the end of the tax year. Therefore, the amount paid by March 15, 2017, is deductible in 2016.

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