CPA Associates,a cash-basis partnership with a calendar tax year,signs a contract for a 30-month subscription to an online tax research service,effective as of November 1.The firm pays the full $15,000 subscription bill on the November 1,2017 subscription start date.For 2017 the firm can deduct

Question

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A)Because the life of the subscription extends beyond the close of the tax year following the year of payment,the payment must be capitalized and the cost spread over the periods benefited.$15,000/30 months = $500 per month × two months = $1,000.

CPA Associates,a Cash-Basis Partnership with a Calendar Tax Year,signs a Contract