ABC Corporation mails out its annual Christmas bonuses to employees on December 24th.Ed, a cash basis taxpayer, is an employee who is on a ski trip until January 7th of the new year, but is aware that his annual Christmas bonus arrives on the 28th of December.Ed cannot delay reporting the income from the bonus until the new year.

Question

Quizplus · Accepted Answer

Cash basis taxpayers must report income in the year it is received or made available to them, regardless of whether they have actually received the cash or not. In this case, even though Ed is not physically present to receive the bonus on December 28th, it is still considered made available to him and must be reported as income for the current year.

ABC Corporation Mails Out Its Annual Christmas Bonuses to Employees