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 31,2017 and has his daughter,Julie,pick up his check on January 2,2018.Who reports the income and when?

Question

Quizplus · Accepted Answer

As a cash basis taxpayer, Jason must report income when it is constructively received. Since the bonus was available to him on December 31, 2017, he must report it as income for 2017, regardless of when it was actually picked up.

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