Jason's employer pays year-end bonuses each year on December 31. Jason, a cash basis taxpayer, would prefer to not pay tax on his bonus this year (and actually would prefer his daughter to pay tax on the bonus). So, he leaves town on December 31, 2016 and has his daughter, Julie, pick up his check on January 2, 2017. Who reports the income and when?

Question

Quizplus · Accepted Answer

As a cash basis taxpayer, Jason must report the income in the year it was made available to him, which is 2016, regardless of when he actually picks up the check.

Jason's Employer Pays Year-End Bonuses Each Year on December 31