Becky Is a Cash Basis Taxpayer with the Following Transactions

question 19

Multiple Choice

Becky is a cash basis taxpayer with the following transactions during her calendar tax year: $\begin{array}{llcc} \text { Cash basis revenue} & \$54,000 \\ \text {Cash basis expenses, except rent } &25,000\\ \text {Rent expense (paid on December 1) for use of a building for 24 months } &24,000\\\end{array}$
What is the amount of Becky's taxable income from her business for this tax year?

• A)$7,000 loss
• B)$11,000
• C)$27,500
• D)$28,000
• E)None of the above

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Definitions:

Break-even

A condition where the aggregate of all financial outgoings is identical to the aggregate of all income, resulting in a neutral earnings scenario.

Monthly Unit Sales

The total quantity of products sold by a company in one month.

Selling Price

The amount for which a company offers its goods or services for sale to customers.

Advertising Budget

The total amount of money allocated for promoting products and services to potential customers.