A calendar year,cash basis corporation began business on October 1,2010 and paid $2,400 for a 12-month liability insurance policy.The corporation can deduct $2,400 as insurance expense for its first tax year ending on December 31,2010.

Question

Quizplus · Accepted Answer

The insurance policy covers a 12-month period, and the corporation paid for the entire policy in advance. Therefore, the corporation can deduct the entire $2,400 as insurance expense for its first tax year ending on December 31, 2010.

A Calendar Year,cash Basis Corporation Began Business on October 1,2010