In: Finance
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
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 –