Question

Question 16 0.4 pts Ann owns an accounting practice (sole proprietorship). During 2020, Ann received payments of $200,000. The $200,000 consists of: • $30,000 payment for services rendered in 2019 but not paid by the client until 2020 • $160,000 payment for services rendered and paid in 2020 • $10,000 prepayment received in 2020 for services that will be rendered in 2021 In addition to the $200,000 payments received in 2020, at the end of 2020 Ann held accounts receivable of $10,000, all for services rendered in 2020. What is Ann's gross income for 2020 if Ann is a cash-method taxpayer?

Answer 1

A cash basid tax payer reposits mome In the year it is received, regardless of when it was actually econed All items of mcome that are actually received during the tax year are included in the tax payer's gross income Gross mcome of Ann during the year 2020 services rendered and paid in 2020 payoments received an 2020 1,60,000 10,000 gross income 1,70,000 * 30,000 payments are not paid in 2020 Accounts because receivables are also not Ancluded Ann is a cash method tax payer.