On November 1, 2020, Gus purchased a 12 month health insurance policy for $1,800 that runs from February 1, 2021 to January 31, 2022. How much of the $1,800 expenditure can Gus deduct in 2020 and how much can he deduct in 2021, respectively, if he is a cash method taxpayer? 

A. He can deduct $0 in 2020 and $1,800 in 2021. 

B. He can deduct $0 in 2020 and $1,650 in 2021. 

C. He can deduct $1,500 in 2020 and $300 in 2021. 

D. He can deduct $1,800 in 2020 and $0 in 2021. 

E. None of the other answers are correct.

Answer rating: 100% (QA)

As a cash method taxpayer Gus can only deduct expenses in the year in which they are ... View the full answer