Mark is a cash basis taxpayer.He is a partner in the M&M partnership,and his share of the partnership's profits for 2011 is $90,000.Only $40,000 was distributed to him in January 2011,and this was his share of the 2010 partnership profits.None of the 2011 profits were distributed although Mark's share of the 2011 profits was $90,000.Mark's gross income from the partnership for 2011 is $40,000.

Question

Quizplus · Accepted Answer

A cash basis taxpayer reports income when it is actually or constructively received. Mark's gross income from the partnership for 2011 is $0 because he did not receive any of the 2011 profits in that year. The $40,000 received in 2011 was from 2010 profits.

Mark Is a Cash Basis Taxpayer