Cash Basis

About Cash Basis:

Cash Basis (cash Method) is the accounting method used by most individual taxpayers; also called the cash receipts and disbursements method. The cash method recognizes income and deductions when money is received or paid. Former IRC (check if this IRC provision is current here) §446(c).

Example of Cash Basis:

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Carl, a cash method taxpayer, has the carpets in his office building shampooed on December 20 and immediately gets a bill for the service. He pays the bill on January 1, so the tax deduction is taken in the next year.

See also other Tax Terms and Definitions in U.S.A.

accounting method; accrual basis.

U.S. and other Developed Countries International Tax Meaning

A Cash Basis or Cash Method is an accounting method which recognizes income and deductions when money is received or paid.