An Exception to the Economic Performance Test Allows the Deduction

question 50

Multiple Choice

An exception to the economic performance test allows the deduction of year-end accruals if
I.The liability exists and the amount of the liability can be reasonably estimated.
II.Economic performance occurs within the shorter of 8 1/2 months after the close of the tax year or a reasonable time after the close of the tax year
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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:

Endocytosis

is a cellular process in which substances are brought into the cell by engulfing them in a vesicle formed from the plasma membrane.

Vesicle

Small sac containing a liquid or gas, such as a blister in the skin or an intracellular, membrane-bounded sac.

Material

A substance or substances from which something is or can be made.

Nucleus

The cell's central organelle, containing most of its genetic material.