Question

Kate is an accrual basis, calendar-year taxpayer. On November 1, 2015, Kate leased out a building for $4,500 a month. On that day Kate received 7 months rental income on the building, a total of $31,500 ($4,500 × 7 months). How much income must Kate include on her 2015 tax return as a result of this transaction?

Answer 1

$31500 is the answer.

Explanation:

On November 1, 2015, Kate leased out a building for $4,500 a month. On that day Kate received 7 months rental income on the building, a total of $31,500 .

She paid 2 months for the revenues that is November and December.

Accrual method is a method that records the revenue related accounting transactions based on their earning time and also the time when the expenses are incurred.

Hence, the answer is $31500.