Match Each Statement with the Correct Term Below

question 105

Multiple Choice

Match each statement with the correct term below.
-Realization

• 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:

Killing

The act of causing death deliberately or due to negligence.

Large

Referring to something of significant size, volume, or extent, larger than most others of the same category.

Megalo-

A prefix derived from Greek, meaning 'large' or 'great', used in medical and scientific terms.

Excessive

An amount, level, or degree of something that exceeds what is normal, necessary, or reasonable, often leading to negative consequences.