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Subject Author Date
Rental income glitch rlsusenet@NOSPAMPUHLEEZschnapp 03-11-2007
Posted by rlsusenet@NOSPAMPUHLEEZschnapp on March 11, 2007, 4:09 am
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 On reviewing my banking records for 2006 while preparing my
taxes, I noticed that one of my tenant's rent checks never
actually showed up in the account (I manage that account by
mail, and failed to notice the absence of a deposit
confirmation -- THAT won't happen again!).

I asked the tenant for a copy of the cleared check, and he
admitted that he had never received one. He immediately
provided a replacement check.

So here's the question: Do I record that rental income as
having been received in 2006 (when the tenant issued the
check that got lost and was never cashed) or in 2007 (when
the replacement check was issued and cleared)?

I'm guessing that it's 2007 rental income -- not 2006. Any
opinions?

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<< that may be imposed upon the taxpayer. >>
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Posted by Bill on March 11, 2007, 12:23 pm
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 NoSuchPerson@bigfoot.com posted:

> On reviewing my banking records for 2006
> while preparing my taxes, I noticed that one of
> my tenant's rent checks never actually showed
> up in the account (I manage that account by
> mail, and failed to notice the absence of a
> deposit confirmation -- THAT won't happen
> again!).
> I asked the tenant for a copy of the cleared
> check, and he admitted that he had never
> received one. He immediately provided a
> replacement check.
> So here's the question: Do I record that rental
> income as having been received in 2006
> (when the tenant issued the check that got lost
> and was never cashed) or in 2007 (when the
> replacement check was issued and cleared)?
> I'm guessing that it's 2007 rental income -- not
> 2006. Any opinions?

Assuming your rental business is operating on a calendar
year (most common), you report the income in the year you
actually receive the cash. So, yes, it would be 2007, in
this instance.

Bill

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Harlan Lunsford on March 12, 2007, 4:54 am
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rlsusenet@NOSPAMPUHLEEZschnapp.org wrote:

> On reviewing my banking records for 2006 while preparing my
> taxes, I noticed that one of my tenant's rent checks never
> actually showed up in the account (I manage that account by
> mail, and failed to notice the absence of a deposit
> confirmation -- THAT won't happen again!).
>
> I asked the tenant for a copy of the cleared check, and he
> admitted that he had never received one. He immediately
> provided a replacement check.
>
> So here's the question: Do I record that rental income as
> having been received in 2006 (when the tenant issued the
> check that got lost and was never cashed) or in 2007 (when
> the replacement check was issued and cleared)?
>
> I'm guessing that it's 2007 rental income -- not 2006. Any
> opinions?

I'll vote for 2007.

ChEAr$,
Harlan Lunsford, EA n LA

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Ernie Klein on March 12, 2007, 8:54 pm
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> rlsusenet@NOSPAMPUHLEEZschnapp.org wrote:

>> On reviewing my banking records for 2006 while preparing my
>> taxes, I noticed that one of my tenant's rent checks never
>> actually showed up in the account (I manage that account by
>> mail, and failed to notice the absence of a deposit
>> confirmation -- THAT won't happen again!).
>>
>> I asked the tenant for a copy of the cleared check, and he
>> admitted that he had never received one. He immediately
>> provided a replacement check.
>>
>> So here's the question: Do I record that rental income as
>> having been received in 2006 (when the tenant issued the
>> check that got lost and was never cashed) or in 2007 (when
>> the replacement check was issued and cleared)?
>>
>> I'm guessing that it's 2007 rental income -- not 2006. Any
>> opinions?

> I'll vote for 2007.

Most interesting. So far 3 tax professionals say 2007 and 1
says 2006.

No wonder we laypersons get confused.

I tend to go along with the 2006, however. A check is a
negotiable instrument. It has been discussed here before
that if you receive a check in December but hold on to it
and don't cash it until January, you still must count it for
the tax year received. You can't shift income from one year
to the next simply by failing to cash the check.

I don't see much difference in this. There is no argument
by the OP that the check was in fact received in 2006. Just
because the check was then subsequently lost shouldn't shift
the income to the next year anymore then if the OP
intentionally destroyed the check and then claimed it to be
lost as a method to shift income to the next year.

If losing the check was the test then I could shift a lot of
my income to the next (better tax advantage) year just by
selectively 'losing' checks and asking the insurer for a new
check in the new year.

--
-Ernie-

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Dick Adams on March 12, 2007, 4:54 am
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rlsusenet@NOSPAMPUHLEEZschnapp.org wrote:

> On reviewing my banking records for 2006 while preparing my
> taxes, I noticed that one of my tenant's rent checks never
> actually showed up in the account (I manage that account by
> mail, and failed to notice the absence of a deposit
> confirmation -- THAT won't happen again!).
>
> I asked the tenant for a copy of the cleared check, and he
> admitted that he had never received one. He immediately
> provided a replacement check.
>
> So here's the question: Do I record that rental income as
> having been received in 2006 (when the tenant issued the
> check that got lost and was never cashed) or in 2007 (when
> the replacement check was issued and cleared)?
>
> I'm guessing that it's 2007 rental income -- not 2006. Any
> opinions?

If you are using accrual accounting, 2006.

If you are a cash-basis tax-payer, you pay taxes based on
when you received the revenue.

Did the tenant send the check directly to the bank? If
yes, then it is 2007 income (period).

If no, then if the check is NOT on your deposit slip and
you did not lose the check, it is 2007 income.

Otherwise it is 2006 income.

Dick

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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