Question 15

On December 12, 2020, Hook Company, a calendar year, cash basis business, mailed a $5,600 bill to Mrs. Gilder for professional services rendered during the month of November. Mrs. Gilder dropped off her $5,600 check at Hook's office on December 28, but the company secretary did not deposit the check in Hook's bank account until January 3, 2021. Which of the following statements is true?

Group of answer choices

According to the constructive receipt doctrine, Hook must recognize $5,600 income in 2020.

According to the constructive receipt doctrine, Hook must recognize $5,600 income in 2021.

As a cash basis taxpayer, Hook does not recognize $5,600 income until 2021.

As a cash basis taxpayer, Hook can elect to recognize $5,600 income in either 2020 or 2021.