CheapTrade, an accrual basis, calendar year corporation, operates a discount securities brokerage business. CheapTrade accepts orders to
Question:
CheapTrade, an accrual basis, calendar year corporation, operates a discount securities brokerage business. CheapTrade accepts orders to buy or sell marketable securities for its customers and charges them a commission fee for effecting the transaction in a timely, low-cost manner. CheapTrade executes an order on the “trade” date, but title to the securities is not legally transferred and payment to or from the customer is not due until the “settlement date.” In the normal five-day interval between the trade and settlement dates, CheapTrade performs administrative and accounting functions to record the transaction. During the last week of 2016, CheapTrade effected over 18,000 transactions with a trading date in 2016 but a settlement date in 2017. CheapTrade’s commission from these transactions was $1,712,400. In which year should Cheap- Trade recognize this income?
Step by Step Answer:
Principles Of Taxation For Business And Investment Planning 2017
ISBN: 9781259753015
20th Edition
Authors: Sally M. Jones, Shelley C. Rhoades Catanach, Sandra R. Callaghan