11. Dustin has a contract to provide services to Dado Enterprises. In November of this year,...
11.
Dustin has a contract to provide services to Dado Enterprises. In November of this year, Dustin billed Dado $12,000 for the services he rendered during the year. Dado is an accrual-method proprietorship that is owned and operated by Dustin’s father. What amount can Dado deduct this year assuming Dustin uses the cash method and Dado remits payment for the services in January of next year?
Homework Answers
Dado can't deduct any amount this year .
Because Dustin and Dado are related persons, Dado may only deduct the accrual when Dustin recognizes the associated income. Since, under the cash method of accounting, Dustin recognizes the payment as revenue in next year when he receives it, Dado cannot deduct the $12,000 expense until next year .
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11.
Dustin has a contract to provide services to Dado Enterprises.
In November of this year,...
12. Dustin has a contract to provide services to Dado Enterprises. In November of this year,...
12. Dustin has a contract to provide services to Dado Enterprises. In November of this year, Dustin billed Dado $12,000 for the services he rendered during the year. Dado is an accrual-method proprietorship that is owned and operated by Dustin’s father. What amount can Dado deduct this year assuming Dustin uses the accrual method and Dado remits payment for the services in January of next year?
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