Question

6. On December 29, 2017, an employee received a $5,000 check from her employer's client. the check was payable to the employer. The employee did not remit the funds to the employer until December 30, 2017. the employer deposited the check on December 31, 2017, but the bank did not credit the employer's bank account until January 2, 2018. when is the cash basis employer required to include the $5,000 in gross income?

35. Determine the effects of the following on a cash basis taxpayer's gross income for 2017 and 2018.

a. On the morning of December 31, 2017, the taxpayer received a $1,500 check from a customer. The taxpayer did not cash the check until January 3, 2018.

b. The same as part (a) except the customer asked the taxpayer not to cash the check until January 3, 2015, after the customer's salary check could be deposited.

c. The same as part (a), except the check was not received until after the bank had closed on December 31, 2017.

Answer 1

6. the employer will include the $ 5,000 Gross income in year 17 because it is following cash basis system and the amount actually received in book of account on December 30,2017 and the same will be use for accounting cash basis.

35.

A. The income of $ 1500 will charge for tax in year 2017 and not 2018 due to cash basis of account even though check is cleared in year 2018 but received in 2017 only and booked in account..

B. The income of $ 1500 will charge for tax in year 2018 and not 2017 due to cash basis of account Because customer ask to hold the check it will make difference and not charge for tax in received year 2017.

C. The income of $ 1500 will charge for tax in year 2018 and not 2017 due to Check received after closing of bank.