Income and interest day?
Salmon Egg
If I receive a mortgage payment today not due until tomorrow, when is
the interest deductible to the payer? 2009 or 2010? When is the interest
income to me reportable? 2009 or 2010? Does it make a difference if the
bank holding the funds for the check is closed and unavailable?
Bill
--
An old man would be better off never having been born.
--
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Arthur Kamlet
Salmon Egg <Salm...@sbcglobal.net> wrote:
>It is New Year's Eve day as I write in 2009.
>
>If I receive a mortgage payment today not due until tomorrow, when is
>the interest deductible to the payer? 2009 or 2010? When is the interest
>income to me reportable? 2009 or 2010?
Constructive receipt - you have admitted to having received the
payment in 2009, so 2009 it is.
> Does it make a difference if the
>bank holding the funds for the check is closed and unavailable?
Not likely. But a judge might be having a particularly good day
and if I handed you a check on a Sunday, Dec 31, the judge might say
the bank being closed means you did not constructively receive it.
I disagree.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
Stuart A. Bronstein
> Salmon Egg <Salm...@sbcglobal.net> wrote:
>>It is New Year's Eve day as I write in 2009.
>>
>>If I receive a mortgage payment today not due until tomorrow,
>>when is the interest deductible to the payer? 2009 or 2010? When
>>is the interest income to me reportable? 2009 or 2010?
>
> Constructive receipt - you have admitted to having received the
> payment in 2009, so 2009 it is.
I'd think of that as actual receipt, since he actually has a valid
check in his hand. It would be constructive receipt if the borrower
said, "I can pay you now or after new year - what's your preference?"
--
Stu
http://downtoearthlawyer.com
removep...@yahoo.com
> If I receive a mortgage payment today not due until tomorrow, when is
> the interest deductible to the payer? 2009 or 2010? When is the interest
> income to me reportable? 2009 or 2010? Does it make a difference if the
> bank holding the funds for the check is closed and unavailable?
What is the date on the check?
Wallace
"Arthur Kamlet" <kam...@panix.com> wrote in message
news:hhis0l$c2n$1...@reader1.panix.com...
> In article <SalmonEgg-2BDC3...@news60.forteinc.com>,
> Salmon Egg <Salm...@sbcglobal.net> wrote:
>>It is New Year's Eve day as I write in 2009.
>>
>>If I receive a mortgage payment today not due until tomorrow, when is
>>the interest deductible to the payer? 2009 or 2010? When is the interest
>>income to me reportable? 2009 or 2010?
>
> Constructive receipt - you have admitted to having received the
> payment in 2009, so 2009 it is.
he admitted nothing. He said "if". I would think if this came in the first
class mail, that "if" could go either way. ;)
HLunsford
> On Dec 31, 10:43 am, Salmon Egg <Salmon...@sbcglobal.net> wrote:
>
>> If I receive a mortgage payment today not due until tomorrow, when is
>> the interest deductible to the payer? 2009 or 2010? When is the interest
>> income to me reportable? 2009 or 2010? Does it make a difference if the
>> bank holding the funds for the check is closed and unavailable?
>
> What is the date on the check?
>
client's December checks there will be one in the month written to me
for services rendered. However since he did not deliver the check
before 12/31 it will just have to be a deferred asset on his books, and
therefore not a valid business deduction.
--
Holiday ChEAr$!
Harlan Lunsford, EA n LA
Seth
HLunsford <hlun...@bellsouth.net> wrote:
>Date on a check doesn't control. I imagine when I post a certain
>client's December checks there will be one in the month written to me
>for services rendered. However since he did not deliver the check
>before 12/31 it will just have to be a deferred asset on his books, and
>therefore not a valid business deduction.
What if he mailed it 12/30? He has lost control of the money then
(especially if it's a bank check).
Seth
Bill Brown
>
> What if he mailed it 12/30? �He has lost control of the money then
> (especially if it's a bank check).
>
When it comes to a gift, the gift is completed when the recipient
presents the check for payment. The exception to that rule is if the
check does not clear due to insufficient funds or for any other
reason.
If the check doesn't clear there is no gift. If the check clears, the
gift was completed in the tax year it was presented for payment by the
donee.
I am fairly confident that the preceding sentence can cover just about
any realistic scenario that anyone can come up with (as well the
overwhelming majority of the contrived, unrealistic ones).
FYI, the creation of a cashier's check by the maker does not mean the
maker has absolutely given up control of the money. I know that for a
fact from personal experience.
HLunsford
> In article <hhlk8a$lp5$1...@news.eternal-september.org>,
> HLunsford <hlun...@bellsouth.net> wrote:
>
>> Date on a check doesn't control. I imagine when I post a certain
>> client's December checks there will be one in the month written to me
>> for services rendered. However since he did not deliver the check
>> before 12/31 it will just have to be a deferred asset on his books, and
>> therefore not a valid business deduction.
>
> What if he mailed it 12/30? He has lost control of the money then
> (especially if it's a bank check).
>
One time I mentioned to a client to make out my check and mail it by
12/31 so he could get the tax deduction. You know why I said to mail
it. But no! He just had to drop it by the office on 12/31 in order to
save the postage.
ChEAr$!
Harlan Lunsford, EA n LA
--
Wallace
"HLunsford" <hlun...@bellsouth.net> wrote in message
news:hho2gp$1ir$1...@news.eternal-september.org...
> Seth wrote:
>> In article <hhlk8a$lp5$1...@news.eternal-september.org>,
>> HLunsford <hlun...@bellsouth.net> wrote:
>>
>>> Date on a check doesn't control. I imagine when I post a certain
>>> client's December checks there will be one in the month written to me
>>> for services rendered. However since he did not deliver the check
>>> before 12/31 it will just have to be a deferred asset on his books, and
>>> therefore not a valid business deduction.
>>
>> What if he mailed it 12/30? He has lost control of the money then
>> (especially if it's a bank check).
>>
> But of course, IF he did. But he didn't. I know my client(s). (grin
>
> One time I mentioned to a client to make out my check and mail it by 12/31
> so he could get the tax deduction. You know why I said to mail it. But
> no! He just had to drop it by the office on 12/31 in order to
> save the postage.
you should have mailed it to yourself.
D.F. Manno
> It is New Year's Eve day as I write in 2009.
>
> If I receive a mortgage payment today not due until tomorrow, when is
> the interest deductible to the payer? 2009 or 2010? When is the interest
> income to me reportable? 2009 or 2010? Does it make a difference if the
> bank holding the funds for the check is closed and unavailable?
I would think that in these days of ATMs and banks that allow account
holders to deposit checks by scanning them, no bank is ever really
closed and unavailable anymore.
--
D.F. Manno
domm...@aim.com
removep...@yahoo.com
> removeps-gro...@yahoo.com wrote:
> > On Dec 31, 10:43 am, Salmon Egg <Salmon...@sbcglobal.net> wrote:
>
> >> If I receive a mortgage payment today not due until tomorrow, when is
> >> the interest deductible to the payer? 2009 or 2010? When is the interest
> >> income to me reportable? 2009 or 2010? Does it make a difference if the
> >> bank holding the funds for the check is closed and unavailable?
>
> > What is the date on the check?
>
> Date on a check doesn't control. �I imagine when I post a certain
> client's December checks there will be one in the month written to me
> for services rendered. �However since he did not deliver the check
> before 12/31 it will just have to be a deferred asset on his books, and
> therefore not a valid business deduction.
I'm not following. It the check is due Jan/1, one may mail it on Dec/
29 in order to reach on Jan/1 or Jan/2 (assuming there is at least a
one day grace period to pay). But if the post office is fast then the
check will arrive on Dec/31. Just because the post office is fast
means that the interest has to be recorded in the previous year? I
would imagine that the date on the check activates the check. So if
the check is in your hand Dec/31 but the date on it is Jan/1, cashing
the check should not work because the check is not yet active.
In the business example above, would the payer have a deduction the
previous year, and the receiver income the next year? I imagine this
sort of thing happens all the time. For example on 12/20 I enlist a
company to design a website, and the company pays their employee
actually doing the work on 12/31 their regular paycheck, but the
website is only finished on 1/5 of the next year per the contract, and
then the company bills me and I pay it. So the company takes a
deduction for the salary paid as well as expenses related to building
the website (such as software) the previous year, but they get income
the next year Of course, this is assuming the company is on the cash
basis, as opposed to accrual basis.
There must be court cases on this.
HLunsford
> In article <SalmonEgg-2BDC3...@news60.forteinc.com>,
> Salmon Egg <Salm...@sbcglobal.net> wrote:
>
>> It is New Year's Eve day as I write in 2009.
>>
>> If I receive a mortgage payment today not due until tomorrow, when is
>> the interest deductible to the payer? 2009 or 2010? When is the interest
>> income to me reportable? 2009 or 2010? Does it make a difference if the
>> bank holding the funds for the check is closed and unavailable?
>
> I would think that in these days of ATMs and banks that allow account
> holders to deposit checks by scanning them, no bank is ever really
> closed and unavailable anymore.
That's why banks have a cutoff time, say 2 pm daily.
ChEAr$,
Harlan Lunsford, EA n LA
--
HLunsford
>> Date on a check doesn't control. I imagine when I post a certain
>> client's December checks there will be one in the month written to me
>> for services rendered. However since he did not deliver the check
>> before 12/31 it will just have to be a deferred asset on his books, and
>> therefore not a valid business deduction.
>
> I'm not following. It the check is due Jan/1, one may mail it on Dec/
> 29 in order to reach on Jan/1 or Jan/2 (assuming there is at least a
> one day grace period to pay). But if the post office is fast then the
> check will arrive on Dec/31. Just because the post office is fast
> means that the interest has to be recorded in the previous year? I
> would imagine that the date on the check activates the check. So if
> the check is in your hand Dec/31 but the date on it is Jan/1, cashing
> the check should not work because the check is not yet active.
Well, in my example, the check was not DUE on any certain date.
And as for "activating a check", I've never heard such a term applied to
a check. The word "valid" is usually used. But if my client had
actually dated the check Jan 1st, he would not have had a prior year's
tax deduction for it, no matter when delivered, because the check would
not have been valid. And neither would I have had income. Which would
have defeated the purpose of my suggestion to him.
>
> In the business example above, would the payer have a deduction the
> previous year, and the receiver income the next year? I imagine this
> sort of thing happens all the time. For example on 12/20 I enlist a
> company to design a website, and the company pays their employee
> actually doing the work on 12/31 their regular paycheck, but the
> website is only finished on 1/5 of the next year per the contract, and
> then the company bills me and I pay it. So the company takes a
> deduction for the salary paid as well as expenses related to building
> the website (such as software) the previous year, but they get income
> the next year Of course, this is assuming the company is on the cash
> basis, as opposed to accrual basis.
>
> There must be court cases on this.
>
Certainly your website design company has payroll expense in year one.
But only a purist accountant would demand that his client accrue 1/3
income in year one. That completed contract method is used mostly by
construction companies. The income from a web design project wouldn't
be material enough to matter.
Besides, such web designer generally work on the cash basis anyways.
ChEAr$!
Harlan Lunsford, EA n LA
--
Wallace
> removep...@yahoo.com wrote:
>> On Jan 1, 12:00 pm, HLunsford <hlunsf...@bellsouth.net> wrote:
>
>>> Date on a check doesn't control. I imagine when I post a certain
>>> client's December checks there will be one in the month written to me
>>> for services rendered. However since he did not deliver the check
>>> before 12/31 it will just have to be a deferred asset on his books, and
>>> therefore not a valid business deduction.
>>
>> I'm not following. It the check is due Jan/1, one may mail it on Dec/
>> 29 in order to reach on Jan/1 or Jan/2 (assuming there is at least a
>> one day grace period to pay). But if the post office is fast then the
>> check will arrive on Dec/31. Just because the post office is fast
>> means that the interest has to be recorded in the previous year? I
>> would imagine that the date on the check activates the check. So if
>> the check is in your hand Dec/31 but the date on it is Jan/1, cashing
>> the check should not work because the check is not yet active.
>
> Well, in my example, the check was not DUE on any certain date.
> And as for "activating a check", I've never heard such a term applied to
> a check. The word "valid" is usually used. But if my client had actually
> dated the check Jan 1st, he would not have had a prior year's tax
> deduction for it, no matter when delivered, because the check would not
> have been valid. And neither would I have had income. Which would have
> defeated the purpose of my suggestion to him.
I thought banks ignore a post dated check, and treat it as good.
Dan Lanciani
| One time I mentioned to a client to make out my check and mail it by
| 12/31 so he could get the tax deduction. You know why I said to mail
| it. But no! He just had to drop it by the office on 12/31 in order to
| save the postage.
It's funny; I never had a significant issue like this before. But today
I received a check dated 12/30 (envelope postmarked same) for a non-trivial
amount. I'm sure it will be included on the 2009 1099-MISC. I really
don't care one way or the other and I'd like to keep things simple. Is
there a serious downside to including it in 2009 income?
Dan Lanciani
ddl@danlan.*com
Seth
Stuart A. Bronstein <spam...@lexregia.com> wrote:
>kam...@panix.com (Arthur Kamlet) wrote:
>> Salmon Egg <Salm...@sbcglobal.net> wrote:
>
>>>It is New Year's Eve day as I write in 2009.
>>>
>>>If I receive a mortgage payment today not due until tomorrow,
>>>when is the interest deductible to the payer? 2009 or 2010?
The payer paid it in 2009, so it's deductible then.
>>> When
>>>is the interest income to me reportable? 2009 or 2010?
>>
>> Constructive receipt - you have admitted to having received the
>> payment in 2009, so 2009 it is.
>
>I'd think of that as actual receipt, since he actually has a valid
>check in his hand.
But he doesn't (and can't) _know_ he has a valid check until January
4, 2010 (presuming he got the check late in the day, when the banks
were already closed).
Suppose the borrower died on January 1, and his bank heard about it
before it opened on January 4. The bank is allowed not to honor the
check, so Salmon wouldn't have been paid in 2009.
> It would be constructive receipt if the borrower
>said, "I can pay you now or after new year - what's your preference?"
"Please pay me now."
"Oops, I forgot my checkbook. I'll mail the check tomorrow."
Seth
Seth
Bill Brown <bro...@longwood.edu> wrote:
>On Jan 2, 2:52�am, se...@panix.com (Seth) wrote:
>
>> What if he mailed it 12/30? �He has lost control of the money then
>> (especially if it's a bank check).
>>
>When it comes to a gift, the gift is completed when the recipient
>presents the check for payment.
But this wasn't a gift, it was a mortgage payment (or a payment to a
business for services performed).
>FYI, the creation of a cashier's check by the maker does not mean the
>maker has absolutely given up control of the money. I know that for a
>fact from personal experience.
If the check is stolen, the maker might be able to get it cancelled
and re-issued; but that's usually up to the bank, and therefore the
make _has_ given up control (since the bank can decide not to
cooperate with him).
Seth
Seth
removep...@yahoo.com <removep...@yahoo.com> wrote:
>I'm not following. It the check is due Jan/1, one may mail it on Dec/
>29 in order to reach on Jan/1 or Jan/2 (assuming there is at least a
>one day grace period to pay).
It won't be delivered on Jan 1. (And this year, Jan 2 isn't a
business day.)
> But if the post office is fast then the
>check will arrive on Dec/31. Just because the post office is fast
>means that the interest has to be recorded in the previous year?
Yes. It's recorded when received. Why should there be a difference
between the post office delivering it on Dec 31 and the client handing
it in on the same day? Either way, the business has the same check at
the same time.
> I would imagine that the date on the check activates the check.
You might, but you'd be wrong. A bank can pay a post-dated check if
it feels like it, and if you think banks spend the money to have
employees read the scribbled dates on checks, think again. (How many
people accidentally put last year's date on checks for a few weeks?
Technically, those are all "stale", but banks tend to pay them
anyway. It's always the bank's option.)
> So if the check is in your hand Dec/31 but the date on it is Jan/1,
>cashing the check should not work because the check is not yet
>active.
Depositing it will work because the bank won't bother reading the
date, or won't care.
>In the business example above, would the payer have a deduction the
>previous year, and the receiver income the next year?
That can happen. (Even more easily, suppose that at 10 PM a customer
in New York sends money to a business in London; it's the next day in
London.)
Seth
Seth
Wallace <please...@microsoft.com> wrote:
>I thought banks ignore a post dated check, and treat it as good.
It's the bank's option. (See the UCC section dealing with banks,
explained to me by a lawyer as "The bank wins.") Typically, that's
just what they do.
Seth
removep...@yahoo.com
HLunsford
>
> It's funny; I never had a significant issue like this before. But today
> I received a check dated 12/30 (envelope postmarked same) for a non-trivial
> amount. I'm sure it will be included on the 2009 1099-MISC. I really
> don't care one way or the other and I'd like to keep things simple. Is
> there a serious downside to including it in 2009 income?
>
downside to adding it to 2009 income.
ChEAr$,
Harlan Lunsford, EA n LA
--
Bill Brown
> In article <1f540f52-a015-4ee3-ab8f-882af6b21...@v25g2000yqk.googlegroups.com>,
> But this wasn't a gift, it was a mortgage payment (or a payment to a
> business for services performed).
>
Oh, I thought this thread was about when a gift became completed.
Seth
>It's funny; I never had a significant issue like this before. But today
>I received a check dated 12/30 (envelope postmarked same) for a non-trivial
>amount. I'm sure it will be included on the 2009 1099-MISC. I really
>don't care one way or the other and I'd like to keep things simple. Is
>there a serious downside to including it in 2009 income?
So he wrote and mailed it 12/30/2009, and you received it 1/2/2010?
The downside is that the taxes on it will have to be paid for 2009
income; this might hit you with underpayment penalties (depending on
which safe harbor you were planning on using) and the tax will have to
be paid earlier (if it's 2010 income, at the earlies 4/15/2010 for
estimated, possibly 4/15/2011 if you're in a safe harbor anyway). The
upside is that it's taxable at your 2009 rates, safe from higher taxes
in 2010 due to increased income or increased tax rates.
Seth
Dan Lanciani
In article <hhr8ht$oj$1...@reader1.panix.com>, se...@panix.com (Seth) writes:
| In article <135...@news.IPSWITCH.COM>, Dan Lanciani <ddl@danlan.*com> wrote:
|
| >It's funny; I never had a significant issue like this before. But today
| >I received a check dated 12/30 (envelope postmarked same) for a non-trivial
| >amount. I'm sure it will be included on the 2009 1099-MISC. I really
| >don't care one way or the other and I'd like to keep things simple. Is
| >there a serious downside to including it in 2009 income?
|
| So he wrote and mailed it 12/30/2009, and you received it 1/2/2010?
Correct. (I think a machine rather than a he did it.)
| The downside is that the taxes on it will have to be paid for 2009
| income; this might hit you with underpayment penalties (depending on
| which safe harbor you were planning on using) and the tax will have to
| be paid earlier
That's not a problem. How about this for an obscure scenario, though?
Three+ years from now when 2009 is closed but 2010 is open a detailed
audit determines that it was indeed 2010 income because I had neither
actual nor constructive receipt in 2009. It's too late to get a refund
for 2009 but not too late to owe more tax for 2010. :)
Dan Lanciani
ddl@danlan.*com
Bill Brown
> On Jan 2, 11:55�pm, se...@panix.com (Seth) wrote:
>
> > In article <1f540f52-a015-4ee3-ab8f-882af6b21...@v25g2000yqk.googlegroups.com>,
> > But this wasn't a gift, it was a mortgage payment (or a payment to a
> > business for services performed).
>
> Oh, I thought this thread was about when a gift became completed.
Well, there is such a thread somewhere.
On Dec 31 2009, 1:43 pm, Salmon Egg <Salmon...@sbcglobal.net> wrote:
> It is New Year's Eve day as I write in 2009.
>
> If I receive a mortgage payment today not due until tomorrow, when is
> the interest deductible to the payer? 2009 or 2010? When is the interest
> income to me reportable? 2009 or 2010? Does it make a difference if the
> bank holding the funds for the check is closed and unavailable?
>
The rules for deduction of expenses for a cash basis taxpayer are
reasonably clear. As noted by others, the OP has interest income in
2009.
HLunsford
I'ts called Tax pro license, sort of like poetic license.
Stuart A. Bronstein
> Stuart A. Bronstein <spam...@lexregia.com> wrote:
>>kam...@panix.com (Arthur Kamlet) wrote:
>>>> When
>>>>is the interest income to me reportable? 2009 or 2010?
>>>
>>> Constructive receipt - you have admitted to having received
>>> the payment in 2009, so 2009 it is.
>>
>>I'd think of that as actual receipt, since he actually has a
>>valid check in his hand.
>
> But he doesn't (and can't) _know_ he has a valid check until
> January 4, 2010 (presuming he got the check late in the day,
> when the banks were already closed).
You're making up facts again, that have nothing to do with the
hypothetical we are talking about. The hypo said,
"I receive a mortgage payment today not due until tomorrow,..." If
he receives it he knows about it.
I suppose you could say that he's in the hospital in a coma because
he drank too much celebrating the new year. But that has nothing
to do with it.
>> It would be constructive receipt if the borrower
>>said, "I can pay you now or after new year - what's your
>>preference?"
>
> "Please pay me now."
>
> "Oops, I forgot my checkbook. I'll mail the check tomorrow."
Again, that has nothing to do with the hypothetical.
--
Stu
http://downtoearthlawyer.com
Stuart A. Bronstein
> Wallace <please...@microsoft.com> wrote:
>
>>I thought banks ignore a post dated check, and treat it as good.
>
> It's the bank's option. (See the UCC section dealing with banks,
> explained to me by a lawyer as "The bank wins.") Typically, that's
> just what they do.
If that's what the lawyer said, he was largely wrong. There are many
situations where the bank doesn't win. E.g. if someone forges your
name to a check or an endorsement and your bank pays it, they have to
pay you back.
In this case, the applicable provision of the UCC (at least
California's version" says,
"A bank may charge against the account of a customer a check that is
otherwise properly payable from the account, even though payment was
made before the date of the check, unless the customer has given
notice to the bank of the postdating describing the check with
reasonable certainty."
--
Stu
http://downtoearthlawyer.com
Salmon Egg
number of responses. I am even more surprised by the disconnect between
my questions and the responses. I will put it another way.
Does the tax code have anything to say about when the interest involved
is deductible to the payer and when it becomes income to the mortgage
holder? Does the code specify a unique way of handling the payment? What
variations are allowed?
Bill
--
An old man would be better off never having been born.
Seth
Stuart A. Bronstein <spam...@lexregia.com> wrote:
>se...@panix.com (Seth) wrote:
>> Stuart A. Bronstein <spam...@lexregia.com> wrote:
>>>
>>>I'd think of that as actual receipt, since he actually has a
>>>valid check in his hand.
>>
>> But he doesn't (and can't) _know_ he has a valid check until
>> January 4, 2010 (presuming he got the check late in the day,
>> when the banks were already closed).
>
>You're making up facts again, that have nothing to do with the
>hypothetical we are talking about. The hypo said,
>
>"I receive a mortgage payment today not due until tomorrow,..." If
>he receives it he knows about it.
He knows he received a piece of paper that looks just like the valid
check he received a month earlier. But until the bank tells him, he
doesn't know that it _is_ a valid check. (Even if it is now,
according to everything known, it might not still be by the time the
bank opens in the new year.)
>>> It would be constructive receipt if the borrower
>>>said, "I can pay you now or after new year - what's your
>>>preference?"
>>
>> "Please pay me now."
>>
>> "Oops, I forgot my checkbook. I'll mail the check tomorrow."
>
>Again, that has nothing to do with the hypothetical.
The hypothetical was that the borrower _appeared_ to give the lender a
choice. We don't know that he actually did (unless he pulled out a
wad of cash while asking).
Many years ago (when there was a "bulge" tax bracket), my then
employer asked employees if we'd rather receive bonuses at the end of
December or the beginning of January. That wasn't constructive
receipt, because the employer wasn't constrained to follow the
employee's wishes. It seems to me that's the same as the quoted
situation; the borrower is asking for preferences.
"I'd prefer to get paid now."
"How much is that worth to you?"
Seth
Stuart A. Bronstein
> Stuart A. Bronstein <spam...@lexregia.com> wrote:
>>
>>"I receive a mortgage payment today not due until tomorrow,..."
>>If he receives it he knows about it.
>
> He knows he received a piece of paper that looks just like the
> valid check he received a month earlier. But until the bank
> tells him, he doesn't know that it _is_ a valid check. (Even if
> it is now, according to everything known, it might not still be
> by the time the bank opens in the new year.)
What it looks like is irrelevant. Is it valid or is it not? He
may not know until after the first of the next year, but that has
nothing to do with whether he recognizes income.
If he gets a valid check it's actual receipt, not constructive
receipt, even though as a practical matter he can't do anything
with it at that time. If the check is not valid, it's not any kind
of receipt, no matter when the check was issued and no matter when
he received it.
>>>> It would be constructive receipt if the borrower
>>>>said, "I can pay you now or after new year - what's your
>>>>preference?"
>>>
>>> "Please pay me now."
>>>
>>> "Oops, I forgot my checkbook. I'll mail the check tomorrow."
>>
>>Again, that has nothing to do with the hypothetical.
>
> The hypothetical was that the borrower _appeared_ to give the
> lender a choice. We don't know that he actually did (unless he
> pulled out a wad of cash while asking).
So what? That was the question, not what all the possible
permutations could be.
--
Stu
http://downtoearthlawyer.com
Stuart A. Bronstein
> As the original poster on this subject, I was surprised by the
> large number of responses. I am even more surprised by the
> disconnect between my questions and the responses. I will put it
> another way.
Actually most of the responses were directly applicable to your
question, though you may have realized it because of the jargon and
layers of complexity.
> Does the tax code have anything to say about when the interest
> involved is deductible to the payer and when it becomes income
> to the mortgage holder? Does the code specify a unique way of
> handling the payment? What variations are allowed?
Bottom line, it depends whether the taxpayer involved is an accrual
or cash basis tax payer. I'll assume cash basis, since most
individuals and small companies function that way.
The payer gets to deduct money in the year when the check is either
given or dropped in the mail. The receiver recognizes income when
the check is actuallly received (all this assuming, of course, that
the check is good).
--
Stu
http://downtoearthlawyer.com
Salmon Egg
"Stuart A. Bronstein" <spam...@lexregia.com> wrote:
> Salmon Egg <Salm...@sbcglobal.net> wrote:
>
<snip>> > Does the tax code have anything to say about when the interest
> > involved is deductible to the payer and when it becomes income
> > to the mortgage holder? Does the code specify a unique way of
> > handling the payment? What variations are allowed?
>
> Bottom line, it depends whether the taxpayer involved is an accrual
> or cash basis tax payer. I'll assume cash basis, since most
> individuals and small companies function that way.
>
> The payer gets to deduct money in the year when the check is either
> given or dropped in the mail. The receiver recognizes income when
> the check is actuallly received (all this assuming, of course, that
> the check is good).
That is the kind of reply I was looking for, assuming the advice is
accurate.
>
> --
> Stu
> http://downtoearthlawyer.com
--
An old man would be better off never having been born.
--
removep...@yahoo.com
wrote:
> > Wallace <pleasenos...@microsoft.com> wrote:
>
> >>I thought banks ignore a post dated check, and treat it as good.
>
> > It's the bank's option. �(See the UCC section dealing with banks,
> > explained to me by a lawyer as "The bank wins.") �Typically, that's
> > just what they do.
>
> If that's what the lawyer said, he was largely wrong. �There are many
> situations where the bank doesn't win. �E.g. if someone forges your
> name to a check or an endorsement and your bank pays it, they have to
> pay you back.
>
> In this case, the applicable provision of the UCC (at least
> California's version" says,
>
> "A bank may charge against the account of a customer a check that is
> otherwise properly payable from the account, even though payment was
> made before the date of the check, unless the customer has given
> notice to the bank of the postdating describing the check with
> reasonable certainty."
So there is a concept of a check becoming active/valid.
Bill Brown
> In article <Xns9CF77E7AF8562spamtraplexregia...@130.133.4.11>,
> �"Stuart A. Bronstein" <spamt...@lexregia.com> wrote:
>
> > Bottom line, it depends whether the taxpayer involved is an accrual
> > or cash basis tax payer. �I'll assume cash basis, since most
> > individuals and small companies function that way.
>
> > The payer gets to deduct money in the year when the check is either
> > given or dropped in the mail. �The receiver recognizes income when
> > the check is actuallly received (all this assuming, of course, that
> > the check is good).
>
> That is the kind of reply I was looking for, assuming the advice is
> accurate.
Stu's answer is correct.