Match Each Statement with the Correct Term Below

question 70

Multiple Choice

Match each statement with the correct term below.
-Legislative Grace Concept

• A)Taxpayer reports income when received in cash or its equivalent and takes deductions as they are paid.
• B)A deduction taken in one year that is recovered in a later year is reported as income in the year of recovery to the extent that the deduction reduced taxable income.
• C)Taxpayer reports income as earned and deductions as incurred.
• D)The result of an arms-length transaction.
• E)Exclusions and deductions result from specific acts of Congress that must be strictly applied and interpreted.
• F)The taxability of a transaction is determined by the reality of the transaction rather than some contrived appearance.
• G)The reporting of an item of income or expense on a tax return
• H)No income is realized until the taxpayer's invested capital is recovered.
• I)All income received is taxable unless some specific provision of the tax law allows exclusion of the item.
• J)These taxpayers are not deemed to transact at arms-length.

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Definitions:

Payee

The party in a transaction who receives the payment.

Unconditional Promise

A pledge or assurance without any stipulations, qualifiers, or conditions, guaranteeing certain actions or outcomes.

Contractual Specifications

Detailed descriptions outlined in a contract that specify the agreed-upon standards, materials, and methods to be used.

"IOU"

An informal document acknowledging a debt.