Jones,Inc.,a calendar-year taxpayer,is in the air conditioner repair business.The business uses the cash method.In December of the current year,Jones charged $100 of supplies at Refrigeration,Inc.,(he will pay the credit card bill in January)and also purchased $600 of supplies at XYZ on open account (he will make a payment on the open account in January).What is the amount that is deductible by Jones,Inc.,in the current year?

Question

Quizplus · Accepted Answer

Only the $100 charge at Refrigeration, Inc. is deductible in the current year because it was charged on a credit card and thus considered paid for tax purposes. The $600 purchase at XYZ on open account is not deductible until payment is actually made in January of the following year.

Jones,Inc,A Calendar-Year Taxpayer,is in the Air Conditioner Repair Business