Emma,a Single Taxpayer,obtains Permission to Change from a Calendar Year
Emma,a single taxpayer,obtains permission to change from a calendar year to a fiscal year ending June 30,2014.During the six months ending June 30,2014,she earns $40,000 and has $8,000 of itemized deductions.What is the amount of her annualized income?
All of the following statements are true except:
A)once adopted,an accounting period normally cannot be changed without approval by the IRS.
B)taxpayers who change from one accounting period to another must annualize their income for the resulting short period.
C)taxpayers filing an initial tax return are required to annualize the year's income and prorate exemptions and credits.
D)an existing partnership can change its tax year without prior approval if the partners with a majority interest have the same tax year to which the partnership changes.
Which of the following partnerships can elect the cash basis method of accounting?
A)a CPA firm with average revenues of $20 million
B)a chocolate manufacturer with average revenues of $3 million
C)a cleaning service partnership generating average revenues of $5.5 million whose partners are Joe,Larry and Smith Inc.
D)None of the above.
Under the cash method of accounting,all of the following are true with the exception of:
A)Fixed assets are always expensed as the taxpayer pays for the assets.
B)Gross income includes the value of property received.
C)To some extent,a taxpayer may control the year in which an expense is deductible by choosing when to make the payment.
D)Income is reported in the tax year in which payments are actually or constructively received.