McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 69

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?
a.The policy covers the business property from April 1 of year 0 through March 31 of year 1.b.The policy begins on February 1 of year 1 and extends through January 31 of year 2.c.Assume Justin paid $6,000 for a 24-month policy that covers from April 1, year 0 through March 31, year 2.d.Assume that instead of paying an insurance premium, Justin paid $4,800 to rent his business property from April 1 of year 0 through March 31 of year 1.