Question

ABC Corporation declared a dividend for taxpayers of record as of December 24, 2018. The dividend checks were mailed on December 31, 2018. Ed, a cash basis shareholder, received the dividend check on January 2, 2019. Ed cannot delay reporting the income from the dividend until 2019. True or false?

Answer 1

False

Step-by-step explanation:

ABC Corporation declared a dividend for taxpayers of record as of December 24, 2018. The dividend checks were mailed on December 31, 2018. Ed, a cash basis shareholder, received the dividend check on January 2, 2019. Ed can delay reporting the income from the dividend until 2019 because that is when it was paid and he has made an election to be a cash basis shareholder.

Cash basis means that he reports his income as at when they are received not when they are declared, as that would mean accrual basis of reporting.