Bob Operates a Clothing Business Using the Accrual Method Over

question 39

Essay

Bob operates a clothing business using the accrual method over a calendar year. In October of last year, Bob contracted with his father, Tim, for consulting advice. Tim is a cash-basis calendar-year taxpayer, and he billed Bob for $6,000 of consulting fees. This amount was comparable to amounts charged by other consultants (a reasonable amount). Bob paid $2,500 of the consulting fee by December 31 ^st of last year, but the remaining $3,500 was not paid until January of this year. When can Bob deduct the consulting fee?

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Definitions:

Body Mass Index

A measurement derived from a person's height and weight, used to categorize underweight, normal weight, overweight, and obesity.

Extremely Thin

Having a significantly low body weight or body mass index, often related to health issues or dietary habits.

Set-Point Concept

The idea that physiological systems regulate variables at a specific set level, maintaining homeostasis.

Hypothalamus

A small structure beneath the thalamus, involved in the control of eating, drinking, and emotional behavior.