Poole Company, a calendar year taxpayer, incurred $589 of long-distance telephone charges in December 2015 and mailed a check to the telephone company on January 4, 2016. If Poole is a cash basis taxpayer, it reports a $589 tax deduction in 2016.

Question

Quizplus · Accepted Answer

Cash basis taxpayers report expenses in the year they are paid, so Poole Company would deduct the expense in 2016 when the payment was made.

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