Dave is a plumber who uses the cash method of accounting. This year Dave requested that his clients make their checks payable to his son, Steve. This year Steve receivedchecks in the amount of $62,000 for Dave's plumbing services. Which of the following is a true statement?

Question

Quizplus · Accepted Answer

Even though Dave requested clients to make checks payable to his son, Steve, the income still belongs to Dave and must be reported as his income for tax purposes. Therefore, Dave is taxed on $62,000 of plumbing income this year. Option B is incorrect because Dave cannot deduct the amount received by Steve, as it is still considered his income. Option C is incorrect because Steve did not perform the plumbing services and should not be taxed on the income. Option D is incorrect because the $62,000 is not considered a gift, but rather payment for services rendered.

Dave Is a Plumber Who Uses the Cash Method of Accounting