Dave Is a Plumber Who Uses the Cash Method of Accounting

question 29

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 choices are correct.

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Definitions:

Informed Consent

A legal and ethical principle requiring individuals to be fully informed about and consent to procedures or activities affecting them.

Necessary

Something that is required or essential for a particular purpose, action, or outcome.

Harmful

Causing or capable of causing damage, injury, or negative effects to something or someone.

Debriefing

A process following a research study or mission where participants are given an explanation of the study's purpose and its results, and any necessary counseling.