Keagan Company, a calendar year taxpayer, incurred $1,490 of long-distance telephone charges in December 2015 and mailed a check to the telephone company on January 4, 2016. If Poole is an accrual basis taxpayer, it reports a $1,490 tax deduction in 2016.

Question

Quizplus · Accepted Answer

The expenses should be deducted in the year they were incurred, not in the year they were paid. Therefore, Keagan Company should report a $1,490 tax deduction in 2015.

Keagan Company, a Calendar Year Taxpayer, Incurred $1,490 of Long-Distance