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Cash Basis Taxpayer

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Dictionary Says

Definition of 'Cash Basis Taxpayer'

A taxpayer who reports income and deductions in the year that they are actually paid or received. Cash basis taxpayers cannot report receivables as income, nor deduct promissory notes as payments.
Investopedia Says

Investopedia explains 'Cash Basis Taxpayer'

The rules for cash basis taxpayers are essentially the same as for cash basis businesses. Cash basis accounting is the alternative to accrual basis accounting.

Related Definitions

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    Cash Basis

    A major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out. This contrasts to the other major accounting method, accrual ...
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  • Cash Accounting

    An accounting method where receipts are recorded during the period they are received, and the expenses in the period in which they are actually paid.
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  • Accrual Accounting

    An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The general idea is that economic ...
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