TAP: Cash Method

General Description:

The objective of the Tax Accounting Series is for the participant to acquire a basic understanding as to how the various tax accounting rules apply in determining when an item is taxable or deductible and in what year an item is taxable and deductible. This class will emphasize the year in which an item is included and deducted for a taxpayer using the cash method.

Learning Objective:

After completing this course the participant will be able to:

• Summarize the use of the cash method in reporting an item of income and deducting an item as an expense.
• Determine the following, with regards to items of income:
• When is the receipt of property taxable;
• What is ­constructive receipt;
• Economic Benefit doctrine: Is it possible to recognize an item as income without being in either actual or constructive receipt of the item?
• Discuss the tax treatment of option payments, security deposits, and retainers.
• Determine when items of prepaid income are taxable.
• Discuss the proper tax treatment of rent-to-own contracts.
• Illustrate the tax principle of “receipt by agent is receipt by principal.”
• Describe the tax effect of the Tax Cuts and Jobs Act, especially Rev. Proc. 2024-23, §471(c), §448, and the aggregation rules of §52 and Reg. §1.52-1(d).
• Determine when a cash basis taxpayer is entitled to a deduction.
• Discuss the treatment of prepayment of expenses and when prepaid expenses are deductible.
• Illustrate why items paid for with a credit card are deductible in the year charged and not in the year paid.
• Discuss the deductibility of payments made with an IOU.
• Determine when the interest on a home equity line of credit (HELOC) loan is deductible.
• Discuss the options available for tenant finish costs.

Instructors:

Mark A. Vogel is a retired professor and director of the University of Denver Graduate Tax Program, where for 38 years he taught courses in individual, fiduciary, tax accounting, partnership, and corporate taxation. He is the author of Divorce Taxation Guide (John Wiley & Sons) and Individual Taxation (Shepards/McGraw-Hill). He received a J.D. and LL.M. in Taxation from the University of Denver College of Law and an undergraduate accounting degree from the University of Notre Dame. He is also a CPA licensed in Illinois.

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