Dave Is a Plumber Who Uses the Cash Method of Accounting

question 29

Multiple Choice

Dave is a plumber who uses the cash method of accounting. This year Dave requested that his clients make their checks payable to his son, Steve. This year Steve received checks in the amount of $62,000 for Dave's plumbing services. Which of the following is a true statement?

• A)Dave is taxed on $62,000 of plumbing income this year.
• B)Steve is taxed on $62,000 of plumbing income this year.
• C)Steve is taxed on $62,000 of income from gifts received this year.
• D)Dave may deduct the $62,000 received by Steve.
• E)None of the choices are correct.

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Definitions:

Principle of Opposites

A concept suggesting that everything has an opposite and that the conflict between opposites is a fundamental aspect of human experience.

Motivator

An internal or external factor that stimulates desire and energy in individuals to be continually interested and committed to a job, role, or subject, or to make an effort to attain a goal.

Behavior

Observable actions or reactions of an individual or system, often analyzed in psychology to infer motives or psychological states.

Generator

A machine or device that converts mechanical energy into electrical energy for use in an external circuit.