As a contractor, I recieved an inital draw payment for a project in the end of December, but did not start or deposit it till January. 90% of the draw will be paid out to Sub-contractors this year.. Is there an exception so that its not labeled as income for 09 when its all getting paid out in 2010 since the Job spans the two years?
1 Answer from Attorneys
The answer lies in whether you are treating your income on the cash or accrual basis. If it is on the cash basis, you will have the income and 2009 and the expenses and 2010. On an accrual basis, depending upon when the work was performed by the subcontractors will determine whether or not income and expense are in 2009 or 2010.
You need to review this in detail with your tax and business attorney.
I hope this helps!
Ron Cappuccio
www.TaxEsq.com
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