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Small business income question

Forum|Forum|2 years ago
March 11, 2024
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I started a single-member LLC last year. I developed mobile apps and I added Google Ads in my app.

I had $30 earnings from Google Ads last year, but since Google Ads has minimum $100 payout threshold, I cannot payout these $30 to my business bank account, thus these money is still in my Google Ads account which shows earnings =$30 and payments =$0.

In this case, do I need to report these $30 as the business income on Schedule C?

Thanks!

Best answer by DaveF1006

No. if you use the cash basis for accounting, you will not report the income for this year since you have not received the funds.

[Edited 03/11/22|7:15 am PST]

@manbeing

DaveF1006Answer

No. if you use the cash basis for accounting, you will not report the income for this year since you have not received the funds.

[Edited 03/11/22|7:15 am PST]

@manbeing

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manbeingAuthor

@DaveF1006

I have been confused as I got a different answer here. Could you please confirm if I need to report it or not?

"As you can't withdraw the $30, this amount isn't constructively received by you and you don't have to report it on Schedule C of your tax return.

The full text of the IRS regulation defining constructive receipt states as follows:[2]

Income although not actually reduced to a taxpayer's possession is constructively received by him in the taxable year during which it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year if notice of intention to withdraw had been given. However, income is not constructively received if the taxpayer's control of its receipt is subject to substantial limitations or restrictions."