With respect to income from services, which of the following is true?
A) The income is always amortized over the period the services will be rendered by an accrual basis taxpayer.
B) A cash basis taxpayer can spread the income from a 24-month service contract over the contract period.
C) If an accrual basis taxpayer sells a 36-month service contract on July 1, 2018 for $3,600, the taxpayer's 2018 gross income from the contract is $600.
D) If an accrual basis taxpayer sells a 24-month service contract on July 1, 2018, one-half (12/24) the income is recognized in 2019.
E) None of these.

Question

Quizplus · Accepted Answer

For an accrual basis taxpayer, income from services is recognized as earned or performed, regardless of when payment is received. Therefore, the entire amount of the service contract sold in Question C is recognized as income in 2018, the year in which it was sold.

With Respect to Income from Services, Which of the Following