Final answer:
The statement claiming an accrual basis taxpayer can deduct an expense if it passes either the all events test or the economic performance test is false. Both tests must be satisfied for an expense to be deductible.
Step-by-step explanation:
An accrual basis taxpayer cannot deduct an expense solely based on either the all events test or the economic performance test; both tests must be passed. Under the all events test, all events have occurred to establish the fact of the liability and the amount can be determined with reasonable accuracy. However, under the economic performance test, the expense is not deductible until the service or property is provided or used, or the economic performance occurs with respect to the liability.
A common misconception is that either test alone is sufficient for a deduction. For the final answer in two lines: An accrual basis taxpayer must meet both the all events test and the economic performance test to deduct an expense; hence, the correct answer is B. False.