Question

TQK, LLC, provides consulting services and was formed on 1/31/X5. Aaron and ABC, Inc., each hold a 50 percent capital and profits interest in TQK. If TQK averaged $27,000,000 in annual gross receipts over the last three years, what accounting method can TQK use for X9

Answer 1

Accrual method

Step-by-step explanation:

As the average annual growth receipts is $27,000,000 which is greater than the $25,000,000 this amount reflects an exception due to which it cannot be applied for cash

Also the accrual method is also selected because it helps while subtracting the expenses instead of cash basis plus it also provides an accurate amount as compared with other methods. And, there is no need to maintain separate books for the purpose of tax

down the net income from the peak tax bracket.