Edsel Posted July 4, 2020 Report Share Posted July 4, 2020 I occasionally encounter "deferred revenue" from someone's balance sheet when trying to prepare their taxes. I understand the IRS has a convention called "constructive receipt" which can change this from a balance sheet to actual taxable revenue. What circumstances (other than cash basis accounting) can force "constructive receipt?" Quote Link to comment Share on other sites More sharing options...
Max W Posted July 5, 2020 Report Share Posted July 5, 2020 Deferred revenue can be best understood as Prepaid revenue. Subscriptions, rent, insurance are examples. Deferred revenue is most common among companies selling subscription-based products or services that require prepayments. Quote Link to comment Share on other sites More sharing options...
Lee B Posted July 5, 2020 Report Share Posted July 5, 2020 I have a client who is a coffee roaster who also sells espresso equipment. Occasionally, they will receive good sized deposits a month or two in advance of delivering the espresso equipment to their customer, which I record as a liability. Quote Link to comment Share on other sites More sharing options...
Edsel Posted July 6, 2020 Author Report Share Posted July 6, 2020 Thanks to MaxW and CBS for taking time to address this, but What circumstances (other than cash basis accounting) can force "constructive receipt?" Quote Link to comment Share on other sites More sharing options...
Max W Posted July 9, 2020 Report Share Posted July 9, 2020 It only applies to Cash Basis. Quote Link to comment Share on other sites More sharing options...
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