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Question

Can I expense an item in 2020 that I paid for in 2021?

Forum|Forum|5 years ago
January 19, 2021
1 reply
0 views

I own a small business that uses a cost method to value inventory. On around October 20th, 2020 I took delivery of an item that I sold shortly thereafter. I paid for this item with a 30% deposit and mailed the remaining balance on November 23, 2020 (for which I have a check

If you purchased and sold an item in 2020, then the sale and purchase would both be recorded in 2020.

You asked, “Can I expense an item in 2020 that I paid for in 2021?” but all the dates in your question are for 2020 so the transaction was completed in the same year.

You generally cannot deduct expenses in advance, even if you pay them in advance. See prepayments.

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