AICPA CPA-Regulation Exam - Topic 3 Question 9 Discussion

Actual exam question for AICPA's CPA-Regulation exam

Question #: 9
Topic #: 3

[All CPA-Regulation Questions]

A cash basis taxpayer should report gross income:

AOnly for the year in which income is actually received in cash.

BOnly for the year in which income is actually received whether in cash or in property.

CFor the year in which income is either actually or constructively received in cash only.

DFor the year in which income is either actually or constructively received, whether in cash or in property.

Show Suggested Answer

Suggested Answer: D

Choice 'd' is correct. A cash basis taxpayer should report gross income for the year in which income is either actually or constructively received, whether in cash or in property.

Choice 'a' is incorrect. Income also be constructively received in property - not only actually in cash.

Choice 'b' is incorrect. Income also be constructively received - not only actually.

Choice 'c' is incorrect. Income also be received in property - not only cash.

by Virgina at May 04, 2022, 07:08 PM

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5 months ago

Key steps: original value is $1M, depreciation is 50%. That means current value is $500,000. So the unassumed risk is probably the full $500,000. Option A looks right.

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