Grima Wormtongue is a cash method taxpayer who prepaid $12,000 for an insurance policy on September 1, 20x1. The policy is an 8-month policy with coverage beginning next year on July 1, 20x2. Under the 12-month rule, how much can he deduct for the 20x1 tax year?

Multiple Choice

• $0 None is deductible.

• $12,000 All is deductible.

• $4,000 One-third is deductible.

• None of these.

• $6,000 One-half is deductible.