Greene Partnership had average annual gross receipts for the past three years of $24.8 million and never has reported average annual gross receipts above $25 million. One of the partners is Jackson, Inc., a C corporation. Because Greene meets the average annual gross receipts test, it may use the cash method of accounting even though it has a partner that is a C corporation.

Question

Quizplus · Accepted Answer

Greene Partnership can use the cash method of accounting because it meets the average annual gross receipts test, which allows businesses with gross receipts of $25 million or less (indexed for inflation) over the past three years to use the cash method, regardless of whether they have a C corporation as a partner.

Greene Partnership Had Average Annual Gross Receipts for the Past