Due to a Shortage of Cash,East Coast Entertainment Company,an Accrual

question 79

Multiple Choice

Due to a shortage of cash,East Coast Entertainment Company,an accrual basis taxpayer,could not pay its November 2017 utility bill on time.In February of 2018,East Coast Entertainment pays the utility bill.
I.East Coast can deduct the expense on either its 2017 or 2018 tax return.
II.East Coast cannot deduct the utility expense in 2017 because it is paid in 2018.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Addiction

A compulsive need for and use of a habit-forming substance or activity deemed harmful.

Dual Diagnosis

Refers to the co-occurrence of substance abuse problems and mental health disorders in an individual.

Anxiety Disorder

A mental health condition characterized by significant and persistent worry, anxiety, or fear, which can interfere with daily activities.

Personality Disorder

A type of mental disorder characterized by enduring maladaptive patterns of behavior, cognition, and inner experience, exhibited across many contexts.