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 31,2013 and has his daughter,Julie,pick up his check on January 2^nd,2014.Who reports the income and when?

Question

Quizplus · Accepted Answer

As a cash basis taxpayer, Jason is considered to have constructively received the income when it is made available to him, which is December 31, 2013, regardless of when he actually picks it up. Therefore, Jason must report the income in 2013.

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