a. On the morning of December 31, 2019, the taxpayer received a $1,500 check from a customer. The taxpayer did not cash the check until January 3, 2020.

a. On the morning of December 31, 2019, the taxpayer received a $1,500 check from a customer. The taxpayer did not cash the check until January 3, 2020.

Category:
October 21, 2021
7 Views
0
0

Determine the effects of the following on a cash basis taxpayer’s gross income for 2019 and 2020:

a. On the morning of December 31, 2019, the taxpayer received a $1,500 check from a customer. The taxpayer did not cash the check until January 3, 2020.

b. The same as part (a), except that the customer asked the taxpayer not to cash the check until January 3, 2020, after the customer’s salary check could be deposited.

c. The same as part (a), except that the check was not received until after the bank had closed on December 31, 2019.

Answer and ExplanationSolution by a verified expert

A
Explanation
The reason for this that one will record income when cash is received, such as when the check was granted.

Answer
2019 +1500 increase in income.

2020 no change to income

B
Answer
Solution

In this case,you have to consider that the check is not a cash equivalent.This is because of the restrictive conditions which have been placed on it.Therefore,the cash basis tax payer is not supposed to include the amount of $1,500 in the gross income until January 3,2020

C
Answer
Solution...

Here we see that The check was not received after the bank had closed on December 31, 2019. Therefore This check of $1,500 cash equivalent even if it is received after the bank had closed on December 31.

So that Taxpayer's gross income for 2019 increases by $1,500.

No affect in taxpayer's gross income of 2020.

Purchase this answer to view it.
Click the button to login/signup and buy full solution at 2 USD only.

The Best Research Paper Writing Service

Would you want to pay someone to write your paper professionally from scratch? 100% Original and 0% AI Content!.

🎓 Write my Essay
📚 Write my Persuasive Essay
📋 Humanize AI Content for Turnitin
💻 Write my Reflective Essay
📑 Write my Research Paper
📜 Write my Thesis Paper
📘 Write my Dissertation
📋 Write my Case Study
📝 Write my Online Exam
✒️ Write my Term Paper
Write my Paper