Match Each Statement with the Correct Term Below

question 121

Multiple Choice

Match each statement with the correct term below.
-Cash Method

• 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:

Home

A place of residence or refuge for individuals or families, often providing emotional, social, and physical comfort.

Intrude Into Consciousness

The process by which thoughts or feelings enter one's awareness without deliberate intention.

Compulsions

Repetitive behaviors or mental acts that an individual feels driven to perform in response to an obsession, or according to rigid rules.

Post-Traumatic Stress Disorder

A psychological disorder resulting from direct exposure to or observation of a horrifying incident, characterized by reoccurring flashbacks, distressing dreams, and intense fear.