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) Hybrid method
D) Either accrual method or cash method

Question

Quizplus · Accepted Answer

TQK must use the accrual method because its average annual gross receipts exceed the $5 million threshold, which generally requires the use of the accrual method for tax purposes.

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