What is a characteristic of income that is taxable under the cash method?

Income recognized under the cash method of accounting is characterized by being reported when it is actually received. This method is commonly utilized by individuals and small businesses because it aligns the reporting of income with the actual cash flow. Essentially, a taxpayer using the cash method recognizes income at the time they physically receive payment, whether in cash, check, or other forms of payment.

This approach provides a straightforward way to track income, as it directly corresponds to funds that are available for use. Therefore, all forms of income, whether from services or sales, are recognized when payment is made, rather than when the services are performed or goods are provided. This aspect makes option B the correct answer, highlighting the timing of income recognition under the cash basis.

In contrast, the other choices relate to different aspects of income recognition or accounting methods that do not apply specifically to the cash method. For instance, requiring documentation via contracts is more relevant in the context of the accrual method of accounting, while projected earnings are not recognized until actually received, thus not fitting within the cash method's principles. Service-based income does not define taxability, as income from both services and goods may be reported under this method once received.