Hillary is a cash-basis calendar-year taxpayer. During the last week of December she received a letter containing a $5,000 check for services. Which of the following is a true statement? A. Hillary is taxed on the $5,000 of service income in the year she cashes the check. B. Hillary is taxed on the $5,000 of service income in the year the check was mailed. C. Hillary is taxed on the $5,000 of service income in the year she receives the check. D. Hillary is taxed on the $5,000 of service income in the year she provides the services. E. None of these is true.

Question

Helena

Business

31 March, 02:41

Hillary is a cash-basis calendar-year taxpayer. During the last week of December she received a letter containing a $5,000 check for services. Which of the following is a true statement? A. Hillary is taxed on the $5,000 of service income in the year she cashes the check. B. Hillary is taxed on the $5,000 of service income in the year the check was mailed. C. Hillary is taxed on the $5,000 of service income in the year she receives the check. D. Hillary is taxed on the $5,000 of service income in the year she provides the services. E. None of these is true.

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Answers (1)

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Ayla Burns · Answer 1

Option C

Explanation:

It is given that the Hillary has received the check of $ 5,000 on the last week of the December.

Therefore,

Under constructive receipt she is taxed on income at the time the check is received or made available to Hillary i. e on the last year.

Thus, She will be taxed on $ 5000 for the last year

Hence, the correct answer is option (C)