NASSAUSUFFOLK

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  • 1.  recognition of income

    Bronze Most Valuable Member
    Posted 12-29-2014 03:59 PM
    This message has been cross posted to the following Discussions: NASSAUSUFFOLK and ncCPAp on the GO! .
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    A client of mine - is an LLC of attorneys.
    They have been awarded a $ 5 million fee as a settlement for a case that they have been working on.
    However - there was a previous attorney that represented the plaintiff prior to my client coming on board who is suing my client for 50 % of the settlement.
    BEFORE the money was received, my client hired an OUTSIDE attorney - and the $ 5 million was deposited into HIS escrow account. The case is currently in litigation and no determination has been handed down by the judge yet. None of the $ 5 million has been spent. My client NEVER RECEIVED ANY OF THE PROCEEDS YET - only their attorney - who deposited into escrow.

    My question is this -
    Since my client HAS NOT YET received the money - and is a CASH BASIS TAXPAYER - do they have income in 2014 for the money that is in escrow?

    Thanks


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    Ira Kriegsman
    CPA
    KRIEGSMAN & COMPANY
    New York NY
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