Final answer:
The correct statement about income from services for accrual basis taxpayers is that when a service contract covers multiple periods, income is recognized as it's earned, not when it's received. Specifically, with a 36-month service contract for $3,600 starting in July 2019, the income recognized in 2019 is $600.
Step-by-step explanation:
With respect to the treatment of income from services on different accounting bases, the most accurate option from the provided list is c) If an accrual basis taxpayer sells a 36-month service contract on July 1, 2019 for $3,600, the taxpayer's 2019 gross income from the contract is $600. Under the accrual basis accounting method, income is recognized when earned, rather than when received. Therefore, for a service contract that spans multiple periods, the income is allocated based on the extent of services provided.
Option c correctly reflects that an accrual basis taxpayer would divide the $3,600 total income from a 36-month service contract equally over the 36 months. Since only six months fall into 2019 (July to December), the income for 2019 is 6/36 of the total contract value, which is $600. Options a, b, and d are incorrect because an accrual basis taxpayer does not always recognize income over the period the services will be rendered (a), a cash basis taxpayer recognizes income when received, not over the contract period (b), and the allocation in option d does not take into account part of the service occurring in 2019.