On December 18, 2009, a landlord rents an apartment for $700 per
month and collects the first and last month’s rent up front. It is
customary that tenants apply the deposit to their last month’s rent
upon moving out.
An accountant agrees to perform $500 of tax services for an auto
mechanic who has agreed to perform repairs on the car of the wife of
the accountant. The mechanic repairs the car in December 2009 and
the accountant starts and completes the tax work in March 2010.
36. A taxpayer who purchases a Series EE U.S. Savings Bond must
report the interest income (i.e., increase in value) on the bond on the
date the bond is redeemed or the taxpayer can elect to report the
interest currently in income. Under what circumstances should a
taxpayer report income at maturity? Under what circumstances is it
more advantageous to report income currently?
42. Sean, who is single, received social security benefits of $8,000,
dividend income of $13,000, and interest income of $2,000. Except as
noted, those income items are reasonably consistent from year to year.
At the end of 2009, Sean is considering selling stock which would
result in an immediate gain of $10,000, a reduction in future dividends
of $1,000, and an increase in future interest income of $1,500. He has
a