In the case of a corporation that operates a grocery store and has gross receipts of more than $26 million: I. Sales and cost of goods sold must be reported by the accrual method, but other income and expenses may be reported by the cash method II. All income and expenses must be reported by the accrual method III. A change from the cash to the accrual method can be made without securing permission from the IRS Group of answer choices a. I, II and III are true b. I, II, and III are false c. Only II and III are true d. Only I and III are true e. Only I is true

The system of required tax payments applicable to fiscal year S corporations and partnerships: Group of answer choices a. Is intended to encourage these entities to use fiscal years so as to spread the IRSs work throughout the fiscal year b. Requires the taxpayer to pay estimates of the final tax that is based on rates that are greater than the actual rate that applies to the income c. Is elective d. All of the above e. None of the above

Kay, an accrual basis taxpayer, was short of cash and did not pay her December last years maintenance bill until this year. Which of the following statements is correct? Group of answer choices a. If the maintenance bill is paid by August 15, this year, it can be deducted on this years federal return. b. If the maintenance bill is paid at any time this year, it must be deducted on this years federal return. c. Regardless of when the maintenance bill is paid, it should be deducted on last years federal return. d. If the maintenance bill is paid on October 14, this year, it can be deducted on this years federal return. e. None of the above Reserves for estimated future expenses are generally not permitted for tax purposes because they violate what concept? Group of answer choices a. The economic performance test b. The doctrine of constructive receipt c. The claim of right doctrine d. The best evidence rule e. None of the above

On January 1 of the current year, Reuben and Ted form an equal partnership with a cash contribution of $50,000 from Reuben and a property contribution (adjusted basis of $75,000 and fair market value of $50,000) from Ted. Ted acquired the property two years ago. Which of the following statements is incorrect concerning the income tax results of this partnership formation? Group of answer choices

a. The partnership takes a basis of $75,000 in the property contributed by Ted. b. Reuben has a $50,000 basis in his partnership interest. c. No gain or loss results to Reuben, to Ted, or to the partnership. d. Ted has a $50,000 basis in his partnership interest. e. None of the above is false