Christy purchases $1,000-worth of supplies from a local vendor.The supplies are delivered on March 29,2017.The supplies are fully used up by year end.Because of unusual circumstances,a bill for the supplies arrives from the vendor on January 10,2018,and is promptly paid.When can Christy deduct the expenses?
I.In 2017,if she is an accrual basis taxpayer.
II.In 2018,if she is a cash basis taxpayer.

Question

Christy purchases $1,000-worth of supplies from a local vendor.The supplies are delivered on March 29,2017.The supplies are fully used up by year end.Because of unusual circumstances,a bill for the supplies arrives from the vendor on January 10,2018,and is promptly paid.When can Christy deduct the expenses?
I.In 2017,if she is an accrual basis taxpayer.
II.In 2018,if she is a cash basis taxpayer.
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Quizplus · Accepted Answer

An accrual basis taxpayer can deduct expenses when they are incurred, so Christy can deduct in 2017. A cash basis taxpayer can deduct expenses when they are paid, so Christy can deduct in 2018.

Christy Purchases $1,000-Worth of Supplies from a Local Vendor