Under the "one-year rule" for the current period deduction of prepaid expenses of cash basis taxpayers, the asset must expire or be consumed by the end of the tax year following the year of payment.

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The "one-year rule" for current period deduction of prepaid expenses for cash basis taxpayers requires that the asset must expire or be consumed by the end of the tax year following the year of payment. Therefore, prepaid expenses that fail to meet this requirement must be capitalized and deducted in a later year when they are actually consumed or expire.

Under the "One-Year Rule" for the Current Period Deduction of Prepaid