When must individuals report income using the "cash method" of accounting?

Individuals must report income using the "cash method" of accounting when it is actually or constructively received. This method of accounting recognizes income at the time that it is received in cash or when a check is deposited. This means that taxpayers can count the income in the period it is received, making it quite straightforward for many individuals and small businesses.

Using the cash method aligns with how individuals typically manage their finances—recording income when it becomes available for use. This principle helps with cash flow management, offering a clear and practical way to assess the money actually in hand. Thus, income is not reported until there is a tangible receipt, which simplifies tax reporting and aligns reported income more closely with the actual cash resources available to the taxpayer.

The other options do not correctly capture the timing of income reporting under the cash method, as they either refer to non-specific time frames or conditions that do not pertain directly to the actual receipt of cash.