Which tax year must sage report the income

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Sally is an attorney who computes her taxable income using the cash method of accounting. Sage Corporation, owned 40% by Sally's brother, 40% by her cousin, her cousin, and 20% by her grandmother, uses the accrual method of accounting. Sally is a calendar-year taxpayer, whereas Sage Corporation's fiscal year ends on January 31. During 2012, Sally does some consulting work for Sage Corporation for a fee of $10,000. The work is competed on December 15 and Sage receives Sally's invoice on that date. For each of the following assumptions, answer the following questions: During which tax year must Sally report the income? During which tax year must Sage report the income?

a. The payment to Sally is made on December 27, 2013.
b. The payment to Sally is made on January 12, 2014.
c. The payment to Sally is made on February 3, 2014

Reference no: EM13340519

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