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Financial Planning / Tax Strategies
|Subject: Re: Accrued Interest||Date: 6/4/2001 10:15 AM|
|Author: CheetahChrome||Number: 51474 of 121316|
> Subject: Re: Accrued Interest
> Author: gailkay Date: 6/3/01 9:16 PM Number: 51455
> Generally, individuals are cash-basis taxpayers - which means that
> they recognize income when received and expenses when paid. However,
> what does "received" mean? We could spend days discussing
> constructive receipt issues.
Gee ... that sounds like a fun way to spend a few days :-)
> When you say the interest is not payable until you call the loan -
> could you demand the interest earlier?
I cannot get the interest without calling the entire loan (which I haevn't done).
> Are you an owner, or related to someone who owns the stock, or
> do you own a company that owns stock in the company you loaned
> money to?
No, though the loan is convertible to stock under certain conditions (which have not yet been met).
> Now, aren't you sorry you asked?
Well, I do need to know.
> Generally, tho, the answer to your question in most cases would
> be no, you recognize the interest income in the tax year in which
> it is actually paid.
THis was also my initial thought. But then I thought about the fact that certain kinds of investments (e.g., zero coupun bonds?) require one to declare accrued interest each year.
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