Basically it depends; The IRS allows TPs/small businesses to choose between the cash method and the accrual method for reporting income and expenses on their tax returns.
The cash method is the more commonly used method of accounting in small business. Under the cash method, income is not counted until cash (or a check) is actually received,so in your case you must report the income on your 2016 return as you said you received the check at the end of the year of 2016; if you use accrual method, you still must report the income on your 2016 return since your income is earned in the year of 2016. |