Question

Which of the following statements is false?

	A.	In general, an accrual basis taxpayer cannot take a deduction for an accrued expense unless "economic performance" has occurred with respect to the particular item accrued.
	B.	An accrued expense may be deductible even if economic performance has not yet occurred if the "all events test" is met, the expense is a "recurring item," and economic performance occurs within 81/2 months after the close of the tax year.
	C.	In the case of services provided to an accrual basis taxpayer, economic performance occurs in the tax year that the services are provided or performed.
	D.	The recurring item exception to the economic performance requirement for deducting an accrued expense is available to taxpayers classified as tax shelters.
	E.	All of the above are true.

Answer 1

All of the above are true.

In general, an accrual basis taxpayer cannot take a deduction for an accrued expense unless "economic performance" has occurred with respect to the particular item accrued.

An accrued expense may be deductible even if economic performance has not yet occurred if the "all events test" is met, the expense is a "recurring item," and economic performance occurs within 81/2 months after the close of the tax year.

In the case of services provided to an accrual basis taxpayer, economic performance occurs in the tax year that the services are provided or performed.

The recurring item exception to the economic performance requirement for deducting an accrued expense is available to taxpayers classified as tax shelters.

Thanks