McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 75

Jeremy is a calendar-year taxpayer who sometimes leases his business equipment to local organizations. He recorded the following receipts this year. Indicate the extent to which these payments are taxable income to Jeremy this year if Jeremy is (1) a cash-method taxpayer and (2) he is an accrual-method taxpayer..
a. $1,000 deposit from the Ladies' Club who want to lease a trailer. The club will receive the entire deposit back when the trailer is returned undamaged.
b. $800 from the Ladies' Club for leasing the trailer from December of this year through March of next year ($200 per month).
c. $300 lease payment received from the Men's Club this year for renting Jeremy's trailer last year. Jeremy billed them last year but recently he determined that the Men's Club would never pay him so he was surprised when he received the check.