Reference no: EM133555223

Question: Harold is a self-employed consultant and reports his income using the cash method of accounting. In December of Year 1, he expects to receive $400,000 of income from his consulting. In Year 2, because of changes in the industry, he expects to receive $75,000 of taxable income. Harold recently met with a colleague who offered him the opportunity to consult on a new project for a total payment of $150,000. The project would be completed in Year 1. Harold has not yet entered into a contract but his colleague has suggested that he might want to be paid in Year 2 even through the services will be rendered in Year 1. What advice would you give Harold regarding the timing of the receipt for payment of his consulting service