Cash method of accounting

Reference no: EM13762255

Related Party Transactions. Sally is an attorney who computes her taxable income using the cash method of accounting. Sage Corporation, owned 40% by Sally's brother, 40% by her cousin, her cousin, and 20% by her grandmother, uses the accrual method of accounting. Sally is a calendar-year taxpayer, whereas Sage Corporation's fiscal year ends on January 31. During 2012, Sally does some consulting work for Sage Corporation for a fee of $10,000. The work is competed on December 15 and Sage receives Sally's invoice on that date. For each of the following assumptions, answer the following questions: During which tax year must Sally report the income? During which tax year must Sage report the income?

a. The payment to Sally is made on December 27, 2012.

b. The payment to Sally is made on January 12, 2013.

c. The payment to Sally is made on February 3, 2013.

Reference no: EM13762255

Questions Cloud

What would be the costs of each action : What 1 policy could you use to reduce the total amount of emissions and why do you think the policy would reduce the total amount of emissions?

Information triage is the process of : Information triage is the process of sorting through information you have gathered to determine what is most useful

What was jekylls outcome : Do you ever feel as if you are part Jekyll, part Hyde? What was Jekyll's outcome? What do you expect yours to be? Is Hyde evil? Why or why not?

Challenges of business for addressing health disparities : The challenges faced by health plans to address health disparities by using a business case, particularly when trying to achieve a positive return of investment (ROI).

Cash method of accounting : Related Party Transactions. Sally is an attorney who computes her taxable income using the cash method of accounting. Sage Corporation, owned 40% by Sally's brother, 40% by her cousin, her cousin, and 20% by her grandmother, uses the accrual metho..

Describe a case you have experienced as a manager : Describe a case you have experienced or a story within the last three years that you have found through a reputable news source, where the manager(s) of a company did not act ethically or align.

What is the total surplus and producer surplus : How much producer surplus - what is the total surplus - With the price floor at $0.17 per pound of cheese, consumers buy 211 billion pounds of cheese. How much consumer surplus is created now?

Explain why networking standards are important : Explain why networking standards are important and why equipment that uses these standards should be purchased

Ethics case-magnetic toys can hurt : Mega Brands has been selling Magnetix toys for many years. It also sells Mega Bloks, construction toys based on Spider-Man, Pirates of the Caribbean, as well as other products in over 100 countries.

User Account

All Pages