Put T for Taxable Income or N for Nontaxable Income

question 43

Multiple Choice

Put T for Taxable income or N for Nontaxable income beside each item below as it normally would be treated for tax purposes.
-Abdo Corporation wants to determine if it can qualify to use the cash method under the $25 million gross receipts test for 2018. Its gross receipts were $26 million for 2018, $24 million for 2017, $23 million for 2016, and $22 million for 2015. What amount of gross receipts is relevant for determining if Abdo can use the cash method for 2018?

• A) $23 million
• B) $23.5 million
• C) $23.75 million
• D) $24 million

---

Definitions:

Periodic Tenancy

Automatically renewing tenancy with no specific termination date.

Term Lease

A lease agreement that is set for a specified duration of time, after which it may be renewed or terminated.

Exclusive Possession

A legal term referring to the right of a party to use and control property to the exclusion of others.

Lease Termination

The ending of a lease agreement either by mutual agreement, expiration of the lease term, or other means as specified in the contract or by law.