Compute Mary’s income or deductions for 2020 using (1) the cash basis and (2) the accrual basis for each of the following. In May 2020, Mary paid a license fee of $1,200 for the period June 1, 2020, through May 31, 2021. In December 2020, Mary collected $10,000 for January 2021 rents. In January 2020, Mary collected $2,000 for December 2020 rents. In June 2020, Mary paid $7,200 for an office equipment service contract for the period July 1, 2020, through December 31, 2021. In June 2020, Mary purchased office furniture for $273,000. She paid $131,000 in cash and gave a $142,000 interest-bearing note for the balance. The office furniture has a MACRS cost recovery period of seven years. Mary did not make the § 179 election and elected not to take additional first-year depreciation.
Compute Mary’s income or deductions for 2020 using (1) the cash basis and (2) the accrual basis for each of the following.
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In May 2020, Mary paid a license fee of $1,200 for the period June 1, 2020, through May 31, 2021.
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In December 2020, Mary collected $10,000 for January 2021 rents. In January 2020, Mary collected $2,000 for December 2020 rents.
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In June 2020, Mary paid $7,200 for an office equipment service contract for the period July 1, 2020, through December 31, 2021.
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In June 2020, Mary purchased office furniture for $273,000. She paid $131,000 in cash and gave a $142,000 interest-bearing note for the balance. The office furniture has a MACRS cost recovery period of seven years. Mary did not make the § 179 election and elected not to take additional first-year
depreciation.
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