Hillary is a cash-basis calendar-year taxpayer. During the last week of December shereceived a letter containing a $5,000 check for services rendered. Which of the following is a true statement?

Question

Quizplus · Accepted Answer

Hillary is a cash-basis taxpayer, meaning she recognizes income when she receives payment. The fact that the check was mailed in December does not matter; what matters is when she received the payment, which was in December when she received the check. Therefore, she will be taxed on the $5,000 of service income in the year she receives the check.

Hillary Is a Cash-Basis Calendar-Year Taxpayer