Question - In January of 2012, Tim paid $4,800 for an insurance policy that covers his business property for accidents and casualties. Tim is a calendar-year taxpayer who uses the cash method of accounting. What amount of the insurance premium may Tim deduct in 2012 for each of the following alternative scenarios?
The policy covers the business property from April 1, 2012 through March 31, 2013.
The policy begins on February 1, 2013 and extends through January 31, 2014.
Assume Tim paid $6,000 for a 24-month policy that covers from April 1, 2012 through March 31, 2014.
Assume that instead of paying an insurance premium, Tim paid $4,800 to rent his business property from April 1, 2012 through March 31, 2013.