Frank rents an apartment to Pete and collects a cleaning deposit to be repaid at the end of the lease. Under the claim-of-right doctrine, Frank includes the deposit in income when collected.

Question

Quizplus · Accepted Answer

Under the claim-of-right doctrine, a deposit that is refundable is not considered income when collected because there is an obligation to return it at the end of the lease. It is only considered income if it becomes non-refundable.

Frank Rents an Apartment to Pete and Collects a Cleaning