The Green Company, an accrual basis taxpayer, provides business-consulting services. Clients generally pay a retainer at the beginning of a 12-month period. This entitles the client to no more than 40 hours of services. Once the client has received 40 hours of services, Green charges $500 per hour. Green Company allocates the retainer to income based on the number of hours worked on the contract. At the end of the tax year, the company had $50,000 of unearned revenues from these contracts. The company also had $10,000 in unearned rent income received from excess office space leased to other companies. Based on the above, Green must include in gross income for the current year:a. $60,000. b. $50,000. c. $10,000. d. $0. e. None of these.

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1 July, 00:16

The Green Company, an accrual basis taxpayer, provides business-consulting services. Clients generally pay a retainer at the beginning of a 12-month period. This entitles the client to no more than 40 hours of services. Once the client has received 40 hours of services, Green charges $500 per hour. Green Company allocates the retainer to income based on the number of hours worked on the contract. At the end of the tax year, the company had $50,000 of unearned revenues from these contracts. The company also had $10,000 in unearned rent income received from excess office space leased to other companies. Based on the above, Green must include in gross income for the current year:a. $60,000. b. $50,000. c. $10,000. d. $0. e. None of these.

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Rishi Kim · Answer 1

b. $50,000

Explanation:

The gross income is that income which is received before any tax or deductions.

The amount which is included in the gross income is $50,000 as this amount is the unearned rent income that is received from leasing of office space to other companies.

The other information which is given in the question is not relevant and thus, not be considered for the computation part. Hence, ignored it