Final answer:
None of the prepaid rent paid on September 1 by a calendar year cash basis taxpayer for the next 18 months is deductible in the current period is true. Such expenses must be allocated and deducted over the period to which they apply, not when they are paid.
Step-by-step explanation:
The deductibility of prepaid rent by a calendar year cash basis taxpayer depends on the accounting principles that are applied. For a cash basis taxpayer, expenses are generally deductible in the period in which they are paid. However, there is an important exception when it comes to prepaid expenses for services or benefits that extend beyond the end of the current tax year. The IRS requires that these prepaid expenses be allocated and deducted over the period to which they apply.
Given this rule, the statement that None of the prepaid rent paid on September 1 by a calendar year cash basis taxpayer for the next 18 months is deductible in the current period is true. The rent covers a period that extends beyond the end of the current tax year, so it would need to be appropriately allocated across the 18-month period it covers, rather than being fully deductible in the period in which it was paid.