Mark is a cash basis taxpayer.He is a partner in the M&M partnership,and his share of the partnership's profits for 2016 is $90,000.Only $40,000 was distributed to him in January 2016,and this was his share of the 2015 partnership profits.None of the 2016 profits were distributed .Mark's gross income from the partnership for 2016 is $40,000.

Question

Quizplus · Accepted Answer

As a cash basis taxpayer, Mark only includes income that he received during the taxable year. Therefore, he should only include the $40,000 that was distributed to him in January 2016, which was his share of the 2015 partnership profits. The remaining $50,000 of his share of the 2016 partnership profits would not be included in his gross income until they are actually distributed to him.

Mark Is a Cash Basis Taxpayer