Question

Which of the following statements is false?

	A.	The purpose of IRC§267 is to require related taxpayers to match the timing of deductions and income and prevent the deferral of income before the related party deducts the matching expense.
	B.	Related parties for purposes of IRC§267 includes siblings, spouses, ancestors, and lineal descendants.
	C.	Related parties for purposes of IRC§267 also include several corporations if the same persons own more than 50% in value of the outstanding stock of each corporation.
	D.	Generally, a lessee using the cash method of accounting cannot deduct rent until it is paid, regardless of the period to which the rent relates.
	E.	All of the above are true.

Answer 1

The Answer to above is Option E as all the given statements are TRUE

Point A- IRC 267 limits the losses, expenses and interest deduction betweel related parties- Hence TRUE

Point B-IRC 267 include only his spouse, ancestors, and lineal descendants, and any trusts for the primary benefit of such persons (siblings are also included)- Hence TRUE

Point C- IRC 267 includes An individual and a corporation more than 50 percent in value of the outstanding stock of which is owned, directly or indirectly, by or for such individual- Hence TRUE

Point D- In cash basis of accounting, expenses and incomes are recognized only when paid or received and not on accrual basis- Hence TRUE