Question

QULLU Lumpur Saus QUESTION 18 2p Which of the following taxpayers may not use the cash method of accounting in the current year? A qualified personal service corporation in the engineering business having average annual gross receipts for the required period of $29,000,000 An individual with taxable income of $29,000,000 A regular corporation in the retail business with individuals as shareholders and having average annual gross receipts for the required period of $29,000,000 All taxpayers may use the cash method. QUESTION 19 4 points This year, T, an individual taxpayer who is in the 37% tax rate bracket, sold 1.000 shares of ABC stock for $15,000. He had paid $8,000 for the stock ten months ago. In addition, he sold 500 shares of DEF stock for $10,000. He had paid $13,000 for the stock 18 months ago Calculate the net gain to be included in income AND the tax liability on the net gain.

Answer 1

C. A regular corporation in the retail business with individuals as shareholders and having average annual gross receipts for the required period of $29,000,000.

note;

It has been specifically mentioned that a corporation (not being an S corporation) with average annual gross receipts for three years exceeding $25 million, cannot use cash method.

Even a partnership which has a corporation (not being an S corporation) as a partner and having the average annual gross receipts for three preceeding tax years in excess of $25 million cannot use cash method.