With respect to the prepaid income from services, which of the following is true?
A) The treatment of prepaid income is the same for tax and financial accounting for both cash and accrual basis taxpayers.
B) A cash basis taxpayer must report all of the income in the year received.
C) An accrual basis taxpayer can spread the income over the period services are to be provided if all of the services will be completed within three years following the year of receipt.
D) An accrual basis taxpayer can spread the income over the period services are to be provided on a contract for three years or less.
E) None of these.

Question

Quizplus · Accepted Answer

A cash basis taxpayer must report all of the income in the year received, as they recognize income when it is actually received, regardless of when the services are performed.

With Respect to the Prepaid Income from Services, Which of the Following