Homework Answers
a.
Answer: $8,400
Since S is the cash-basis taxpayer, there should not be any faction of months’ calculation for 12-months payments. Therefore, the deduction is whole amount that is paid in 2019.
b.
Answer: $3,150
Although S is the cash-basis taxpayer, he paid rent for more than 12 months (for 24 months). Therefore, deduction would be for fraction of months, which is 9 months from April 2019 to December 2019.
Deduction amount = (Amount paid / Total number of months) × Months left in the year 2019
= (8,400 / 24) × 9
= 350 × 9
= $3,150
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