Solution-Accrual-method taxpayers, A and X are both

Accrual-method taxpayers

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A and X are both accrual-method taxpayers. A owns all the stock of X. A supplied services to X and accrued income therefor (represented by bookkeeping entries of accounts receivable and payable) of $10; X deducted $10. Later, A forgave the account owing in return for stock of X worth $6. How much income or loss must A and X recognize? What would result if X were on the cash method and had not deducted the $10?

Reference no: EM133258399

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Accrual-method taxpayers

Reference no: EM133258399

Reference no: EM133258399

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