Norah, who gives music lessons, is a calendar- year taxpayer using the cash- basis method of accounting. On October 1 of this year, she received $1,200 for a one- year contract beginning on that date to provide 10 lessons. She gave 6 lessons this year. How much should Norah include in income this year?

Question

Quizplus · Accepted Answer

Under the cash-basis method, income is recognized when it is received. Norah received $1,200 this year, so she must include the entire amount in her income for this year, regardless of when the services are performed.

Norah, Who Gives Music Lessons, Is a Calendar- Year Taxpayer