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In January of year 0, Justin paid $4,800 for an insurance policy that covers his business property for accidents and casualties. Justin is a calendar-year taxpayer who uses the cash method of accounting. What amount of the insurance premium may Justin deduct in year 0 in each of the following alternative scenarios

Answer :

Answer:

$0

Explanation:

Even though the contract period is 12 months or less, Justin must capitalize the cost of the prepayment because the contract period extends beyond the end of next year.

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