A cash basis taxpayer purchased a certificate of deposit for $1,000 on July 1, 2016 that will pay $1,100 upon its maturity on June 30, 2018. The taxpayer must recognize a portion of the income in 2017.

Question

Quizplus · Accepted Answer

The taxpayer must recognize interest income equal to the amount earned from July 1, 2017, through June 30, 2018. Since this period falls partially within 2017, the taxpayer must recognize a portion of the income in 2017.

A Cash Basis Taxpayer Purchased a Certificate of Deposit for $1,000