1- With respect to the unearned income from services, which of the following is true?

a. The treatment of unearned income is the same for tax and financial accounting for both cash and accrual basis taxpayers.

b. A cash basis taxpayer must report all of the income in the year received.

c. An accrual basis taxpayer can spread the income over the period services are to be provided if all of the services will be completed within three years following the year of receipt.

d. An accrual basis taxpayer can spread the income over the period services are to be provided on a contract for three years or less.

e. None of these.

2- 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 for contracts entered into for the current year, the company had $50,000 of unearned revenues from these contracts. The company also had $10,000 in unearned rent income received this year from excess office space leased to other companies. Based on this, Green must include in gross income for the subsequent tax year:

a. $60,000.

b. $50,000.

c. $10,000.

d. $0.

e. None of these.

3- The purpose of the tax rules that apply to below-market loans between family members is:

a. Discourage loans between related parties.

b. Prevent shifting of income among family members.

c. Prevent gifts from being disguised as bad debt expenses.

d. Prevent gift tax avoidance.

e. None of these is true.

Please answer all 3. Thank you very much :)