Poole Services, a calendar year taxpayer, billed a client for $1,675 of services on November 30, 2015, and received a check in full payment from the client on January 12, 2016. If Poole is a cash basis taxpayer, it reports $1,675 taxable income in 2015.

Question

Quizplus · Accepted Answer

As a cash basis taxpayer, Poole would report the income when received, which is in 2016 when the check was received, not in 2015 when the services were billed.

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