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Federal Income Tax

The Cash Method

The Cash Method

Learn about the cash method of taxpayer accounting, including the constructive-receipt doctrine.

Transcript

The taxable year for which a taxpayer reports income or takes deductions often depends on the taxpayer's accounting method. In this lesson, we'll learn about the cash receipts and disbursements method, also called the cash method.

Reporting Income Generally

Generally, a cash-method taxpayer reports income for the year she receives it. See 26 C.F.R. § 1.446-1(c)(1). When a cash-method taxpayer receives income sometimes depends on the income's nature or the payment method. A cash-method...