The tax concept and economic concept of income are in agreement on which of the following:

Question

Quizplus · Accepted Answer

Both the tax concept and economic concept of income agree that income should be recognized in the year it is earned or received. Therefore, rent income for 2020 collected in 2019 is income for 2019. A is incorrect because the tax concept does not include the fair rental value of an owner-occupied home in income, while the economic concept does. B is also incorrect because the tax concept does not include unrealized capital gains in income until they are realized through a sale, while the economic concept may include them.

The Tax Concept and Economic Concept of Income Are in Agreement