Discussion:2 Related Party Cash basis S-Corps and Constructive Receipt

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Discussion Forum Index --> Tax Questions --> 2 Related Party Cash basis S-Corps and Constructive Receipt


G,Snook (talk|edits) said:

13 May 2014
I have a client who has two Cash Basis S-Corporation, in which one Corporation Manages the other. The managed corporation paid $15,000 of management fees on December 31, 2013 to the management corporation via Bill Pay, to which the funds were received on January 7, 2014 (constructive and actual receipt). Does section 267(A)(2) prevent the deduction for the payor corporation since the payee corporation is not taxed until 2014 ? All of the examples regarding 267(a)(2) seem to deal with an accrual basis corp paying a cash basis taxpayer, but say nothing of cash basis to cash basis related party transactions.

Nilodop (talk|edits) said:

14 May 2014
Try posting on taxprotalk.com It's an interesting question. Answer is in the section you cite and the concept of constructive receipt.

Spell Czech (talk|edits) said:

14 May 2014
If a cash basis taxpayer wires some money to another cash basis taxpayer at eleven p.m. on New Year's Eve and the money gets to the recipient at 2 a.m. on January 1st does the payor get the deduction in the earlier year?

Oh, I forgot to tell you the wire of the money was instantaneous, but the payor was on the East Coast and the recipient was on the West Coast.

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