Evaluate Income And Deduction Timing Practice Test

Ben is a calendar-year, accrual-basis owner of a small retail business (no complex corporate structure). On December 31, 2026, he ships goods to a customer under terms that title and risk of loss pass on shipment; the customer is billed $50,000 and will pay in February 2027. Ben also has $1,600 of interest income and expects a $8,000 long-term capital gain if he sells stock in 2026; he itemizes deductions personally. For the business, when should Ben recognize the $50,000 sales revenue?

Priya is a cash-basis individual who itemizes deductions and is subject to the $10,000 limitation on the itemized deduction for state and local taxes. On December 29, 2026, she has already paid $10,000 of state and local taxes for 2026 and is considering paying an additional $4,000 of state estimated tax on December 31, 2026 versus January 15, 2027. Priya expects $150,000 of wages, $1,100 of interest income, and a $5,000 long-term capital gain if she sells stock in 2026. Based on timing and limitation rules, which timing strategy maximizes tax benefits for the state tax payment?