JKL Inc and Matthew Inc

question 14

Multiple Choice

JKL Inc. and Matthew Inc. enter into a business transaction. The two corporations are related parties for tax purposes. Which of the following statements is true?

• A) JKL and Matthew must account for the transaction using the same method of accounting.
• B) The IRS has the right to reallocate income from the transaction to prevent distortion.
• C) The cash method of accounting must be used to account for such transactions.
• D) JKL and Matthew must request permission from the IRS to engage in the related party transaction.

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