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Who are accounted as ‘related persons’ in the accrual method?

Related persons are those which you owe money to, and you should not deduct business expenses and interest owed until the payments have been made and the related person includes such payments in their gross income. 

Related persons include: family members, two entities if the individual has more than half interest in each entity, the fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts. If the same person grants both trusts, a tax-exempt educational or charitable organization and the person who controls the organization, the grantor and fiduciary and the fiduciary and beneficiary of any trust, and lastly, a PSC and any employee-owner. 

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