Joe Is a Self-Employed Electrician Who Operates His Business on the Accrual

question 95

Multiple Choice

Joe is a self-employed electrician who operates his business on the accrual method. This year Joe purchased a shop for his business, and for the first time at year-end he received a bill for $4,500 of property taxes on his shop. Joe didn't pay the taxes until after year-end but prior to filing his tax return. Which of the following is a True statement?

• A) If he elects to treat the taxes as a recurring item, Joe can accrue and deduct $4,500 of taxes on the shop this year.
• B) The taxes are a payment liability.
• C) The taxes would not be deductible if Joe's business was on the cash method.
• D) Unless Joe makes an election, the taxes are not deductible this year.
• E) All of the choices are True.

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Definitions:

Respiratory System

The body system that carries on gas exchange; in vertebrates, consists of the lungs and airways.

Carbon Dioxide

An odorless and colorless gas, the result of organic compounds and carbon being burnt and the process of respiration. Found naturally in the atmosphere, it is essential for the photosynthesis conducted by plants.

Blood

Blood is a vital fluid in humans and other animals that transports necessary substances such as nutrients and oxygen to the cells and carries away waste products.

Transported

Moved or carried from one place to another.