In short
A cash-basis taxpayer has income when an amount is credited to their account, set apart for them or otherwise made available without substantial restriction, even if they haven't actually taken it.
Key takeaways
- A paycheck available on December 31 is income that year, even if the employee waits to cash it.
- Income isn't constructively received if access is substantially restricted.
- Accrual-basis taxpayers use the all-events test instead.
Where it's tested
REG: Individual Taxation: Gross Income — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A cash-basis taxpayer receives a check for services on December 30 but does not deposit it until January 3. The income is recognized in: