Question

On December 27, 2019, the directors of Partridge Corporation, an accrual basis calendar year taxpayer, authorized a cash contribution of $10,000 to the American Cancer Association. The payment is made on April 13, 2020.
Can Partridge deduct the charitable contribution in 2019?
(1) __________Yes because Partridge Corporation is an accrual basis corporation, the charitable contribution must be paid (2) ___________ .

Answer 1

Answer:

Yes because Partridge Corporation is an accrual basis corporation

Explanation:

Since the charitable contribution was approved On December 27, 2019, and the directors of Partridge Corporation, is an accrual basis calendar year taxpayer, the authorized cash contribution of $10,000 to the American Cancer Association ought to be accounted for in the year it was made which is 2019 although the payment is eventually going to be made on April 13, 2020.

Accrual basis records transactions when they are earned (income) or incurred (expenses); and not when they are received (income) or paid for (expenses)