TQK, LLC provides consulting services and was formed on 1/31/X5. Aaron and ABC, Inc. each hold a 50% capital and profits interest in TQK. If TQK averaged $7,000,000 in annual gross receipts over the last three years, what accounting method can TQK use for X9?
A) Accrual method.
B) Cash method.
C) Accrual method or Cash method.
D) Hybrid method.

Question

Quizplus · Accepted Answer

According to the IRS, a business that averages more than $5 million in annual gross receipts over the last three years must use the accrual method for tax purposes. Since TQK averaged $7,000,000 in annual gross receipts over the last three years, they can only use the accrual method for X9. Therefore, the correct choice is A).

TQK, LLC Provides Consulting Services and Was Formed on 1/31/X5