Charlie’s Green Lawn Care is a cash basis taxpayer. Charlie Adame, the sole proprietor, is considering delaying some of his December 2020 customer billings for lawn care into the next year. In addition, he is thinking about paying some of the bills in late December 2020, which he would ordinarily pay in January 2021. This way, Charlie claims, he will have “less income and more expenses, thereby paying less tax!” Is Charlie’s way of thinking acceptable? Please explain.
Charlie’s Green Lawn Care is a cash basis taxpayer. Charlie Adame, the sole proprietor, is considering delaying some of his December 2020 customer billings for lawn care into the next year. In addition, he is thinking about paying some of the bills in late December 2020, which he would ordinarily pay in January 2021. This way, Charlie claims, he will have “less income and more expenses, thereby paying less tax!” Is Charlie’s way of thinking acceptable? Please explain.
Chapter6: Deductions And Losses: In General
Section: Chapter Questions
Problem 11DQ
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Charlie’s Green Lawn Care is a cash basis taxpayer. Charlie Adame, the sole proprietor, is considering delaying some of his December 2020 customer billings for lawn care into the next year. In addition, he is thinking about paying some of the bills in late December 2020, which he would ordinarily pay in January 2021. This way, Charlie claims, he will have “less income and more expenses, thereby paying less tax!” Is Charlie’s way of thinking acceptable? Please explain.
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