Alexis,a cash basis contractor,builds a storage building for Jones.The building is completed,and the bill is given to Jones.Jones pays $60,000 in 2016.Subsequently,Jones files suit for damages based on alleged faulty construction.Alexis required to recognize $60,000 of income in 2016 based upon
I.Constructive Receipt Doctrine.
II.Claim-of-right Doctrine.

Question

Alexis,a cash basis contractor,builds a storage building for Jones.The building is completed,and the bill is given to Jones.Jones pays $60,000 in 2016.Subsequently,Jones files suit for damages based on alleged faulty construction.Alexis required to recognize $60,000 of income in 2016 based upon
I.Constructive Receipt Doctrine.
II.Claim-of-right Doctrine.
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Quizplus · Accepted Answer

The Claim-of-right Doctrine applies here because Alexis received the $60,000 without restriction, and it was not contingent upon the outcome of the lawsuit. The Constructive Receipt Doctrine does not apply because Alexis actually received the payment.

Alexis,a Cash Basis Contractor,builds a Storage Building for Jones