Poole Services,a calendar year taxpayer,billed a client for $1,675 of services on November 30,2017,and received a check in full payment from the client on January 12,2018.If Poole is a cash basis taxpayer,it reports $1,675 taxable income in 2017.

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As a cash basis taxpayer, Poole Services would only recognize income when it is received in cash or a cash equivalent. Since the client's payment was not received until January 12, 2018, the $1,675 would be reported as taxable income in 2018, not 2017.

Poole Services,a Calendar Year Taxpayer,billed a Client for $1,675 of Services