Trip Garage, Inc. (459 Ellis Avenue, Harrisburg, PA 17111), is an accrual basis taxpayer that repairs automobiles.
Question:
In early January 2018, Trip made a few adjustments under the hood; Trip then convinced Samuel that the automobile was working properly. At that time, Samuel agreed to pay only $900 because he did not have the use of the car for a week. Trip said "fine," accepted the $900, and released the automobile to Samuel.
An IRS agent thinks Trip, as an accrual basis taxpayer, should report $1,000 of income in 2017, when the work was done, and then deduct a $100 business loss in 2018. Prepare a memo to Susan Apple, the treasurer of Trip, with your recommended treatment for the disputed income?
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Related Book For
South Western Federal Taxation 2018 Essentials Of Taxation Individuals And Business Entities
ISBN: 9781337386173
21st Edition
Authors: William A. Raabe, James C. Young, Annette Nellen, David M. Maloney
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