All of the following statements concerning cash basis are correct except 1 In general, income is...

All of the following statements concerning cash basis are correct except

1 In general, income is included in taxable income in the year in which it is actually received

2 Income is included in taxable income in the year in which it is constructively received if this precedes the year in which it is actually received

3 The cash basis taxpayer has the option of reporting taxable income in the year it is actually received or constructively received

4 Most taxpayers are cash basis taxpayers

Solutions

Expert Solution

All of the following statements concerning cash basis are correct except the cash basis taxpayer has the option of reporting taxable income in the year it is actually received or constructively received

The cash basis taxpayer has the option of reporting taxable income in the year it is actually received or constructively received – this statement is false as Income is included in taxable income in the year in which it is constructively received other option is not given to tax payers

Therefore correct answer is option: 3 The cash basis taxpayer has the option of reporting taxable income in the year it is actually received or constructively received

Following statements are correct concerning cash basis taxpayers –

Income is included in taxable income in the year in which it is actually received or constructively received
Income is included in taxable income in the year in which it is constructively received even if it is not physically received and this precedes the year in which it is actually received
Most taxpayers are cash basis taxpayers because they reports income when it is actually received and reports expenses when they are paid

jeff jeffy answered 3 weeks ago

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