Mark Is a Cash Basis Taxpayer

question 34

True/False

Mark is a cash basis taxpayer. He is a partner in the M&M partnership, and his share of the partnership's profits for 2017 is $90,000. Only $40,000 was distributed to him in January 2017, and this was his share of the 2016 partnership profits. None of the 2017 profits were distributed. Mark's gross income from the partnership for 2017 is $40,000.

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Definitions:

Accrual Accounting

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash transaction takes place.

Sustainable Annualized

Reflects the ability to maintain performance or activity levels over a year considering current resources and capacities.

Long-Run Future

A perspective focusing on an extended period, considering long-term outcomes, trends, and potential impacts beyond immediate short-term considerations.

Free Cash Flow Valuation

A method to value a company based on the cash flows available after funding operations and capital expenditures.