Jessica is a cash basis taxpayer.When she failed to repay a loan, the bank garnished her salary.Each week $60 was withheld from Jessica's salary and paid to the bank.Jessica is required to include the $60 each week in her gross income even though it is the creditor that benefits from the income.

Question

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As a cash basis taxpayer, Jessica is required to include the $60 each week in her gross income, even though it is being paid directly to the bank as part of the garnishment. The fact that the creditor (the bank) benefits from the income does not change the fact that it is income to Jessica.

Jessica Is a Cash Basis Taxpayer