JKL Inc. and Matthew Inc. enter into a business transaction. The two corporations are related parties for tax purposes. Which of the following statements is true?
- JKL and Matthew must account for the transaction using the same method of accounting.
- The IRS has the right to reallocate income from the transaction to prevent distortion.
- The cash method of accounting must be used to account for such transactions.
- JKL and Matthew must request permission from the IRS to engage in the related party transaction.