In 2018 I inherited a rental property. It is managed by a property management company. Rent is collected on the first of the month. I received checks from the property management company for rental income for Nov and Dec. The check for Nov rental income was dated 12/15/2018 and the check for Dec rental income was dated 1/15/2019.
I received a 1099 Misc from the property management company. The Nov and Dec rental income was reported on the 1099 Misc. I am on a cash basis. Is the 1099 Misc correct since I didn’t receive the Dec rent income check until Jan 15, 2019?
Yes, it is correct. Because you are on a cash basis, you report the income when it is received.
Internal Revenue Code Section 1.451-2(a) outlines the constructive receipt doctrine. It states that income although not actually in a taxpayer’s possession, is constructively received in the taxable year during which it is credited to the taxpayer’s account, set apart for the taxpayer, or otherwise made available so that the taxpayer may draw upon it during the taxable year if notice of intention to withdraw had been given. Income is not constructively received if the taxpayer’s control of its receipt is subject to substantial limitations or restrictions.
In your situation, your agent accepted payment on your behalf in 2018, which means you would have access to the funds in your agent's control.
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