Tabco Inc., a calendar year, accrual basis corporation, accrued $48,800 wage and salary expense and a corresponding liability at the end of 2012. How much of the accrued expense is deductible in 2012?

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Quizplus · Accepted Answer

Under the accrual method, expenses are deductible when they are incurred. However, for wages and salaries, they must be paid within 2.5 months after the end of the tax year to be deductible in that year. Therefore, amounts paid by March 15, 2013, are deductible in 2012.

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