Question

Stephanie won't recognize any income in the final year because she would have recognized it all for tax purposes in years 0 and 1. Will Stephanie recognize any income in the final year?

1) Yes
2) No

Answer 1

Stephanie will not recognize any income in the final year because she would have recognized it all for tax purposes in years 0 and 1.

Step-by-step explanation:

In the final year, Stephanie won't recognize any income because she would have recognized it all for tax purposes in years 0 and 1.

When a taxpayer receives income, they are required to report it on their tax return for the year in which they receive it. This is known as the cash basis of accounting. However, there are certain exceptions to this rule, such as when income is received in advance. In this case, Stephanie recognizes the income in years 0 and 1 for tax purposes, even though she may not have received it yet.

Therefore, the correct answer is No, Stephanie will not recognize any income in the final year.