Under the "twelve month 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 "twelve month rule" requires that prepaid expenses be deducted in the year of payment if they expire or are consumed by the end of the tax year following the year of payment. This is true for cash basis taxpayers.

Under the "Twelve Month Rule" for the Current Period Deduction