In January 2019, Pam, a calendar year cash basis taxpayer, made an estimated state income tax payment for 2018.
The payment is deductible in 2018.

Question

Quizplus · Accepted Answer

According to the general rule of the cash basis method, expenses and deductions are recognized in the year they are paid, not in the year they are incurred. Therefore, because Pam made the estimated state income tax payment in 2019, it cannot be deducted in the 2018 tax year. However, if Pam made the payment prior to December 31, 2018, it would be deductible in the 2018 tax year.

In January 2019, Pam, a Calendar Year Cash Basis Taxpayer