Dave Is a Plumber Who Uses the Cash Method of Accounting

question 103

Multiple Choice

Dave is a plumber who uses the cash method of accounting. This year Dave requested that his clients make their checks payable to his son, Steve. This year Steve received checks in the amount of $62,000 for Dave's plumbing services. Which of the following is a true statement?

• A)Dave is taxed on $62,000 of plumbing income this year.
• B)Steve is taxed on $62,000 of plumbing income this year.
• C)Steve is taxed on $62,000 of income from gifts received this year.
• D)Dave may deduct the $62,000 received by Steve.
• E)None of the above are true

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Definitions:

British Empiricists

Philosophers from Britain who emphasized the importance of sensory experience as the foundation of knowledge.

Transduction

The process of converting one form of energy into another, as in sensory organs transforming physical stimuli into nerve signals.

Sensitization

The process of becoming more receptive or sensitive to a stimulus after repeated exposure to it.

Distal Stimuli

Objects and events in the external world that provide sensory input, as opposed to the sensory signals (proximal stimuli) actually perceived by the senses.