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Becker CPA Review, PassMaster Questions
Lecture: Regulation 3 CPA-01999
Choice "a" is correct. A gain from an illegal activity is includible in income. To determine the gain, a
deduction is permitted for cost of merchandise. Business expenses for operating an illegal business,
other than the cost of merchandise, are not permitted as deduction.
Choices "b", "c", and "d" are incorrect. Each of these answers does not answer either I or II correctly. CPA-02016 Type1 M/C 8. CPA-02016 ARE R02 #9 A-D Corr Ans: B PM#8 R 3-01 Page 39 Which of the following taxpayers may use the cash method of accounting?
d. A tax shelter.
A qualified personal service corporation.
A C corporation with annual gross receipts of $50,000,000.
A manufacturer. CPA-02016
Choice "b" is correct.
Rule: The general rule is that the accrual method of accounting will be required by tax shelters, large C
corporations and manufacturers....
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.
- Fall '10
- The Land