J, an Accrual Basis Taxpayer, Deducted an Estimated Expense for Next

question 23

Multiple Choice

J, an accrual basis taxpayer, deducted an estimated expense for next year that she was required by law to pay.The principle that the IRS follows in disallowing this deduction is the

• A)All events test
• B)Economic performance test
• C)Estimated expense test
• D)Legal compunction test

---

Definitions:

Small Firms

Businesses characterized by a smaller workforce or lower volume of sales, often offering more personalized services.

Owner-manager

An individual who both owns and operates a business, making key decisions and overseeing day-to-day operations.

Shred

The act of cutting or tearing something into small, thin pieces, often used for disposing of sensitive documents securely.

Employment Specialists

Professionals who assist individuals in finding and securing employment, often focusing on those with barriers to employment such as disabilities.