Individuals and small business use cash basis of
accounting.
For deduction of prepaid expenses, there is a rule called 12
month rule.
It allows deduction of a prepaid future expense in the current
year if it is a benefit that no longer extends than the earlier of:
12 months or until the end of the tax year after the tax year
payment is made.
As the 12 month rule applies, rent payment for a property used
for future years is partially deductible in the current year.
Prepaid insurance premiums are deductible to the extent they do
not extend the 12 month period after the tax year in which payment
is made.
Prepaid loan expenses for a personal loan are not deductible at
all and the 12 month rule do not apply.
Prepaid interest must be deducted in the year it is due, not
the year it is paid, even in the cash basis.