.I purchased a business late 2019.
What kind of business? It matters. Sole proprietorship? Single Member LLC? Partnership? Multi-member LLC? S-Corp? C-Corp? Something else. Like I said, this matters for correct and timely tax reporting.
The previous owner will receive all income for trips that she planned this year.
I don't understand the relevance of this statement. If the prior owner still has outstanding money owed to them, that's their issue, not yours. You may need to provide more details.
income has started coming in for the year 2020, but it has to sit in the bank until the time comes to pay for tickets, meals, etc.
All business income is reported as such in the tax year it is received, *no* *matter* *what*. So the fact it may be "for" 2020 is irrelevant. If the business received the income in 2019 then it's reportable as income on the 2019 tax return.
How in the world do I show that I have received this amount of money (mostly to be paid to multiple venues), but it isn't income?
But it *IS* income any way you look at it. The fact it's sitting in a bank account doesn't matter. If you/the business has control of the money, then it's reportable income to the business in the tax year the business or you received that income. Period.
I won't even know if income is made on a trip until all expenses have been paid.
Right *NOW* at this *very* *instant* in time, the business has income that it was paid in 2019. Absolutely nothing on the planet will change that fact. Ever. It gets reported as income received in 2019. No ifs, ands, or but's about it. Expenses are a separate issue that will reduce the amount of that income that is taxable. But you'll deal with that when the time comes.
- Business income is reported/taxed in the tax year it is recieved. Period.
- Business expenses are reported/claimed/deducted in the tax year the expense is incurred. Period.
Yes, it *really* is that simple. Overall though, I would suggest you seek professional help for *at least* your first year of reporting business income/expenses. Meanwhile, feel free to ask more questions here to help you learn. Its not like you learn this stuff through osmosis.
