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.