1. Explain how income is recognized under the cash method of accounting.
2. Are there circumstances in which income is recognized even when a cash basis taxpayer does not receive cash? Explain.
3. What is meant by the concept of constructive receipt?
4.Under what circumstances is a dividend nontaxable to a shareholder recipient? 5Under what circumstances is a state or local income tax refund included in the taxable income of a taxpayer?
6. Congress has chosen to exempt certain income from taxation, such as scholarships, gifts, life insurance proceeds, municipal bond interest, and employee fringe benefits.
Given that one of the primary purposes of the IRC is to raise revenue for the government, why do you think Congress would provide these and other exemptions?
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