Which of the Following Partnerships Can Elect the Cash-Basis Method

question 36

Multiple Choice

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.

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Definitions:

Qualified Residence

A primary or secondary home that meets certain IRS criteria, allowing for potential mortgage interest deductions.

Deduction

An expense that can be subtracted from gross income to reduce the amount of income subject to income tax.

Taxpayer's Principal Residence

The primary dwelling a taxpayer lives in for a major portion of the year, which can qualify for certain tax benefits like the mortgage interest deduction.

Standard Business Mileage

The set rate per mile the IRS allows for deduction when an individual uses their personal vehicle for business purposes.