"rlsusenet[at]NOSPAMPUHLEEZschnapp.org" wrote:

- quote -

Constructive receipt is a fiction created to allow taxation
of money you could have received during the tax year but
didn't due to your own actions. Here you actually received
the check and deposited it. So constructive receipt
shouldn't play a part.

- quote -

I think that would be fine - that's the year you actually
received the funds, despite all your efforts to receive it
in 2006.

Stu

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GrandMarquis99 wrote:
- quote -

Hmmm... So answering the question /isn't/ as simple as I
had thought. I also considered that "constructive receipt"
might be an issue. I actually have a copy of the deposit
slip I sent to the bank, which tends to prove that I DID
receive the check in 2006.

I sort of doubt that the IRS is ever likely to look into
this, and as it happens, it probably doesn't affect my 2006
refund/payment. In fact, it probably won't affect my 2007
refund/payment, either. This is more a question of which
way to report the matter is more accurate.

My slight preference is for reporting the income in 2007,
since the bank records will reflect the state of the
situation, so I wouldn't have to remember that the extra
deposit has already been accounted for.

Thanks for the opinions, folks. I'm leaning toward taking
GrandMarquis99's advice, i.e., "constructive receipt" in
2006.

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<NoSuchPer...[at]bigfoot.com> wrote:

- quote -

"He immediately provided a replacement check."

I was tempted to say "What a good tenant" but then I changed
it to "What an okay tenant." A really good tenant would let
you know promptly that his check had not cleared and *then*
replace it.

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- quote -

If the tenant actually issued the check in 2006, and he
received it then, it's 2006 income (you can't defer income
merely by not cashing a check, or even by losing it; there's
still contructive receipt). However, if the tenant forgot to
send it and he didn't notice until this year, he never had
the check in 2006, and it's 2007 income.

Seth

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"GrandMarquis99" <GrandMarquis99[at]gmail.com> wrote:

- quote -

That was my reaction too. But it also seems to me that the
OP is entitled to an offsetting deduction for 2006 when it
turned out the check never made it into his account.

In that case he would also take it into income in 2007.

Stu

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Harlan Lunsford <hnslunsford[at]bellsouth.net> wrote:
- quote -

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-

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"rlsuse...[at]NOSPAMPUHLEEZschnapp.org" wrote:

- quote -

If you are a cash taxpayer, which most of us are, you report
income when you receive it. In this case it is 2007.

Missy Doyle

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an_ordinary_guy_...[at]hotmail.com (Bill) wrote:
- quote -

As intuitive as it may seem, unfortunately the answer is
that you received the rent payment in 2006 when you received
the original check; the fact that it did not clear the bank
(i.e., that it somehow got lost after you received it) in
2006 is not enough to treat the amount as not received until
the tenant issued a replacement check in 2007. See, e.g.,
Walter v. U.S., 148 F.3d 1027 (8th Cir 1998).

If you could prove that the tenant never sent the check, or
that you never received the check (it's almost impossible to
prove a negative, however), you would be able to defeat
constructive receipt. However, since from the facts it
appears to be the case that the tenant actually did send,
and you did receive, the original check, you were in
constructive receipt of the income represented by that check
in 2006, and should report it as such.

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rlsusenet[at]NOSPAMPUHLEEZschnapp.org wrote:

- quote -

By the way, I use cash accounting for this activity.

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rlsusenet[at]NOSPAMPUHLEEZschnapp.org wrote:

- quote -

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

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rlsusenet[at]NOSPAMPUHLEEZschnapp.org wrote:

- quote -

I'll vote for 2007.

ChEAr$,
Harlan Lunsford, EA n LA

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NoSuchPerson[at]bigfoot.com posted:

- quote -

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

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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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