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From: rjh@ihuxj.UUCP
Newsgroups: net.taxes
Subject: Re: deferred income
Message-ID: <316@ihuxj.UUCP>
Date: Thu, 8-Dec-83 13:09:17 EST
Article-I.D.: ihuxj.316
Posted: Thu Dec  8 13:09:17 1983
Date-Received: Sat, 10-Dec-83 01:42:21 EST
Organization: AT&T Bell Labs, Naperville, Il
Lines: 17

The question is "when is it income?"
The answer depends on whether your income is computed (and filed)
on a "cash" or "accural" basis. Note: you have to file special forms
with the IRS to use the "accural" method.
"Cash" basis income occurs at the time that you receive control over
the assete. You do not have to have possession to have control.
"Accural" basis income occurs at the time that you become entitled
to receive the income, whether you actually ever receive (if you
do not, it become a "bad debt.")
If you agree to defer the entitlement (and therefore delivery) before
the entitlement occurs, income may be defered to other tax periods.
In effect, as part of the contract, you are giving a loan due a
-t a future date and until then you do not have control over the assets.
I am not a lawyer or a tax professional expert. These definitions were
learned during several MBA courses that I have taken.

Randolph J. Herber, ..!ihnp4!ihuxj!rjh