Tax Fraud – Frequently Asked Questions (page 6)
When must one declare income in the U.S.?
The time at which the client is required to report and pay taxes depends on the accounting basis used by the taxpayer (see § 446 of I.R.C.). In the “cash, receipts and disbursements” method, receipt of Cash or property is a taxable event. On the other hand, in an “accrual” basis, the “all events test” is used: when all events concerning receipt of income have occurred, it is a taxable event, in spite of whether payment has been received. In an accrual basis, there is a tendency to be taxed earlier than on a cash, receipts and disbursements basis.