Basis

Cash Basis Prepaid Insurance. Prepaid expenses are the future expenses paid in advance and treated as a current asset until the expenses are incurred. Every month, you will use a portion of that insurance payment you made at the beginning of the year.

While the amortization of such prepayments is. On september 30, 2020 you pay $2,000 for business insurance covering one year. You're a cash basis taxpayer on a calendar year.