In December 2018, Max, a cash- basis taxpayer, rents an apartment to Kadeem. Max receives both the first and last months' rent totaling $1,800 plus a security deposit of $400. The amount of income reported by Max as taxable in 2018 is

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As a cash-basis taxpayer, Max must report income when it is received. The first and last months' rent totaling $1,800 is considered income received in 2018. The security deposit is not income unless it is forfeited or used for rent.

In December 2018, Max, a Cash- Basis Taxpayer, Rents an Apartment