Which of the following statements is always true regarding accounting methods available to a partnership?
A) If a partnership is a tax shelter, it can use the cash method of accounting.
B) If a nontaxshelter partnership had "average annual gross receipts" of less than $5 million in all prior years,
It can use the cash method.
C) If a partnership has a partner that is a personal service corporation, it cannot use the cash method.
D) If a partnership has a partner that is a C corporation, it cannot use the cash method.
E) All of the above statements are false.

Question

Which of the following statements is always true regarding accounting methods available to a partnership?
A) If a partnership is a tax shelter, it can use the cash method of accounting.
B) If a non­tax­shelter partnership had "average annual gross receipts" of less than $5 million in all prior years,
It can use the cash method.
C) If a partnership has a partner that is a personal service corporation, it cannot use the cash method.
D) If a partnership has a partner that is a C corporation, it cannot use the cash method.
E) All of the above statements are false.

Quizplus · Accepted Answer

This statement is always true regarding accounting methods available to a partnership: If a non­tax­shelter partnership had "average annual gross receipts" of less than $5 million in all prior years, it can use the cash method. The other statements are either false or depend on specific circumstances.

Which of the Following Statements Is Always True Regarding Accounting