Assignment #1 Joe Swindle Securities, Inc. (taxpayer) is a securities firm which
ID: 2367782 • Letter: A
Question
Assignment #1
Joe Swindle Securities, Inc. (taxpayer) is a securities firm which uses the accrual method of accounting. Taxpayer executes stock trades and performs settlement functions. Settlement functions include recording the sale and confirming it with the customer. Trades made on December 28, 2011, until the end of the month are not settled until January 2, 2012. Taxpayer made $1,000,000 of net commissions from these trades in late December. Since the security is not credited to the customer
Explanation / Answer
They have to declare it in 2011 as this is on a accural basis which means, the date of trade is important and not when the money is credited.