Solved
A business mails a check by year end, so it's as an expense for that year. The new year comes, and the check expires / never deposited. How does the business report this?
My understanding is that a check is considered an expense on the date it is mailed, not when it is actually deposited by the recipient. But what happens if the recipient NEVER deposits the check or returns it?
Example: Check mails out on 12/31. Business closes books for the year and files taxes accounting for that check/expense. 180 days later, the check expires and was never deposited for whatever reason. That money never left the bank account, so was it really an expense?
If the business already filed its taxes declaring it as an expense, should it file NEXT year's taxes declaring it as income for that year (the year the check expired)? What is the appropriate way to report this?
Example: Check mails out on 12/31. Business closes books for the year and files taxes accounting for that check/expense. 180 days later, the check expires and was never deposited for whatever reason. That money never left the bank account, so was it really an expense?
If the business already filed its taxes declaring it as an expense, should it file NEXT year's taxes declaring it as income for that year (the year the check expired)? What is the appropriate way to report this?
