For tax purposes,one of the requirements to recognize income is:

Question

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Income that is tax-exempt is not subject to taxation, so it does not need to be recognized as taxable income. Therefore, if income is tax-exempt, it cannot satisfy the requirement of being recognized as taxable income for tax purposes. The other choices are incorrect: A) A transaction does not need to be completed for income to be recognized for tax purposes, i.e. if an individual receives an advance payment for services that will be provided in the future, the advance payment is still recognized as taxable income in the current year. C) A transaction must have an economic benefit to the taxpayer to be recognized as taxable income, i.e. if an individual provides services to a friend for free, there is no economic benefit and therefore no taxable income. D) This choice is too broad and inaccurate.

For Tax Purposes,one of the Requirements to Recognize Income Is