cwc@mhuxd.UUCP (12/08/83)
I believe Bruce Wright has correctly identified accounting method as the basis for determining when income is received, except that I think (since I'm not an accountant) that the presentation of a BILL for material or services rendered is the controlling event under the accrual method. The fact that many businesses scramble to invoice their customers as their accounting periods come to a close is evidence of this. Just as many hound suppliers for invoices to increase expenses for the period. Chip
rjh@ihuxj.UUCP (12/08/83)
The question is "when is it income?" The answer depends on whether your income is computed (and filed) on a "cash" or "accural" basis. Note: you have to file special forms with the IRS to use the "accural" method. "Cash" basis income occurs at the time that you receive control over the assete. You do not have to have possession to have control. "Accural" basis income occurs at the time that you become entitled to receive the income, whether you actually ever receive (if you do not, it become a "bad debt.") If you agree to defer the entitlement (and therefore delivery) before the entitlement occurs, income may be defered to other tax periods. In effect, as part of the contract, you are giving a loan due a -t a future date and until then you do not have control over the assets. I am not a lawyer or a tax professional expert. These definitions were learned during several MBA courses that I have taken. Randolph J. Herber, ..!ihnp4!ihuxj!rjh