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Options
- A
It will taxed in the year of receipt
- B
It will taxed in the year of accrual
-
It will taxed based on the method of accounting followed by receiver
Correct answer
- D
It will taxed in the year of accrual or receipt, whichever is earlier
Why this is the answer
Interest income is taxed in accordance with the taxpayer’s regular accounting method—either mercantile (accrual) or cash (receipt).
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