Dave is a plumber who uses the cash method of accounting. This year Dave requested that his clients make their checks payable to his son, Steve. This year Steve received checks in the amount of $119,250 for Dave's plumbing services. Which of the following is a true statement?

Question

Quizplus · Accepted Answer

Even though the checks were made payable to Steve, Dave is still the one providing the plumbing services and therefore earning the income. The fact that the checks were made payable to his son does not change the fact that Dave earned the income and must report it on his tax return. Therefore, option A is the correct statement.

Dave Is a Plumber Who Uses the Cash Method of Accounting