This kind of question has been asked many times - My client sent me a check in December, but I don't deposit it in until January. That payment is included in 1099-MISC. Since I run my business on cash basis, how am I supposed to report this particular payment.
All answers suggest that in such cases IRS's definition of "constructively received" should be used.... which states (per IRS Publication 538) "Income is constructively received when an amount is credited to your account or made available to you without restriction. You do not need to have possession of it. If you authorize someone to be your agent and receive income for you, you are considered to have received it when your agent receives it. Income is not constructively received if your control of its receipt is subject to substantial restrictions or limitations."
My questions are:
- In my case, when my client mailed me a check in December, I was out of the country and had my mail on hold. I deposited that check when returned after New Year. I don't even know if that particular check was in-fact received in my hold mail in 2019. In this case, is that payment considered to be "constructively received"?
- If that payment is not considered to be "constructively received", then how do I reconcile 1099-MISC that my client mailed me (which includes that payment) with reported revenue on my business tax return?
