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taxpayer's marginal federal and A. $1.40 taxable income rather th

taxpayer's marginal federal and A. $1.40 taxable income rather th

CONCEPTS IN FED.TAX.,2020-W/ACCESS
CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter1: Federal Income Taxation—an Overview
Section: Chapter Questions
Problem 43P
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The taxpayer's marginal federal and state tax rate is 25%. Which would the taxpayer prefer? O A. $1.40 taxable income rather than $1.00 tax-exempt income. B. $1.00 taxable income rather than $1.25 tax-exempt income. O c. $1.00 taxable income rather than $.75 tax-exempt income. O D. $1.25 taxable income rather than $1.00 tax-exempt income.
Transcribed Image Text:The taxpayer's marginal federal and state tax rate is 25%. Which would the taxpayer prefer? O A. $1.40 taxable income rather than $1.00 tax-exempt income. B. $1.00 taxable income rather than $1.25 tax-exempt income. O c. $1.00 taxable income rather than $.75 tax-exempt income. O D. $1.25 taxable income rather than $1.00 tax-exempt income.
Under the cash receipts method, which of the following is true (mark all that apply): A. The cash receipts method could distort taxable income since income and expenses from the same activity may be recognized in different tax years. A taxpayer using the cash receipts method has some degree of control over when income is recognized, such as by delaying the sending of invoices to customers. B. Income is recognized in the year of actual or constructive receipt by the taxpayer, regardless of whether the income was earned in that year. c. The taxpayer need not receive cash to be required to recognize income under the cash receipts method. D. None of these is true. E. Generally, a check received is considered a cash equivalent and, upon receipt, must be recognized as income by a cash basis taxpayer. OF. The receipt of anything with a fair market value, or a cash equivalent, is taxable under the cash receipts method.
Transcribed Image Text:Under the cash receipts method, which of the following is true (mark all that apply): A. The cash receipts method could distort taxable income since income and expenses from the same activity may be recognized in different tax years. A taxpayer using the cash receipts method has some degree of control over when income is recognized, such as by delaying the sending of invoices to customers. B. Income is recognized in the year of actual or constructive receipt by the taxpayer, regardless of whether the income was earned in that year. c. The taxpayer need not receive cash to be required to recognize income under the cash receipts method. D. None of these is true. E. Generally, a check received is considered a cash equivalent and, upon receipt, must be recognized as income by a cash basis taxpayer. OF. The receipt of anything with a fair market value, or a cash equivalent, is taxable under the cash receipts method.
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