How to Handle Taxes for Incomes Not Received
Type of Accounting
In case of incomes which have been earned but not received yet, the type of accounting adopted by the investor comes into the picture. The most common form of accounting is that of Accrual System. In case of this type of accounting system, the income earned but not received yet has to be considered for taxation.
In Cash System of Accounting, only the income received by the investor is considered for tax purposes. Banks and other institutions mostly consider the accrual form of accounting and so, this form tends to be more common among investors as well.
