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 $27,000,000 in annual gross receipts over the last three years, what accounting method can TQK use for X9?
A) Accrual method.
B) Cash method.
C) Hybrid method.
D) Accrual method or Cash method.

Question

Quizplus · Accepted Answer

TQK does not meet the $25,000,000 average gross receipts exception that would allow it to qualify to use the cash method or hybrid method of accounting in X9. Thus, it must use the accrual method of accounting for X9.

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