A self-employed attorney, who is a cash-basis taxpayer, performs work for a corporation, which is an accrual-basis taxpayer, and which is owned 100% by the attorney's adult children.

1. Assuming the attorney and the corporationboth use calendar years, when can the corporation deduct the expense if payment is made in the next year?Why?
2. Would your response change if the attorney was also an accrual-basis taxpayer?
3. And what basis might the IRS have for disallowing the corporation's deduction?What substantiation should the corporation supply to overcome the disallowance?