Cal (an accrual-basis taxpayer) enters into a ten-year lease on some rental property.In year 1, Cal receives $3,000 as a security deposit, $5,000 for the first year's rent, and $5,000 for the last year's rent.How much income must Cal report in this first year?
A)$5,000
B)$8,000
C)$10,000
D)$13,000

Question

Quizplus · Accepted Answer

Cal must report the $5,000 for the first year's rent and the $5,000 for the last year's rent as income in the first year, totaling $10,000. The security deposit is not reported as income because it is refundable.

Cal (An Accrual-Basis Taxpayer) Enters into a Ten-Year Lease on Some