GH&F is a calendar year,accrual basis taxpayer.In October 2017,GH&F received a $18,000 cash payment from a tenant who leases space in a commercial office building that GH&F owns.The payment was rent for the 18-month period beginning on November 1,2017.As a result of the payment,GH&F should report:

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Under the accrual basis of accounting, rental income should be recognized when earned, not when received. Since the payment is for rent for the 18-month period beginning on November 1, 2017, the rental income should be recognized over this period. Each month, GH&F should recognize $1,000 in rental income ($18,000/18 months). Therefore, at the end of 2017, GH&F should recognize 2 months of rental income, or $2,000, as book income. However, for tax purposes, the full $18,000 payment is recognized in the year it is received. Therefore, the taxable income will also be $18,000.

GH&F Is a Calendar Year,accrual Basis Taxpayer