Match Each Statement with the Correct Term Below

question 97

Multiple Choice

Match each statement with the correct term below.
-Capital Recovery 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:

Depression

A common and serious medical illness that negatively affects how you feel, the way you think, and how you act, characterized by feelings of sadness, loss of interest in activities, and a variety of emotional and physical problems.

Initial Episode

The first occurrence or manifestation of a situation, condition, or series of events.

Permanent

Having the quality of lasting indefinitely without change or decay.

Research

systematic investigation and study of materials and sources to establish facts and reach new conclusions.