Cyrus's Gross Income Calculation

What amount should Cyrus include in his gross income for last year?

Based on the data provided, how should Cyrus calculate his gross income for the previous year?

Calculation of Cyrus's Gross Income

As a cash method taxpayer reporting on a calendar-year basis, Cyrus should include in his gross income for last year only the amounts he actually received in cash or had constructive receipt of during that year. Let's break down the components:

1. Salary: Cyrus received a salary of $93,500 during the year. This amount should be included in his gross income for last year.

2. Year-end Bonus: Although his employer announced a year-end bonus of $10,800, Cyrus did not receive the bonus check until January of this year. Since he did not have constructive receipt of the bonus in the previous year, he should not include the bonus amount in his gross income for last year.

3. TV: The new TV worth $3,900 did not arrive until March of this year. Since Cyrus did not have possession or control of the TV during last year, he should not include its value in his gross income for last year.

Therefore, only Cyrus's salary of $93,500 should be included in his gross income for last year.