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23 January, 06:59

Hillary is a cash-basis calendar-year taxpayer. During the last week of December she received a letter containing a $5,000 check for services. Which of the following is a true statement? A. Hillary is taxed on the $5,000 of service income in the year she cashes the check. B. Hillary is taxed on the $5,000 of service income in the year the check was mailed. C. Hillary is taxed on the $5,000 of service income in the year she receives the check. D. Hillary is taxed on the $5,000 of service income in the year she provides the services. E. None of these is true.

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  1. 23 January, 08:01
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    Option C

    Explanation:

    It is given that the Hillary has received the check of $ 5,000 on the last week of the December.

    Therefore,

    Under constructive receipt she is taxed on income at the time the check is received or made available to Hillary i. e on the last year.

    Thus, She will be taxed on $ 5000 for the last year

    Hence, the correct answer is option (C)
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