Television station Channel 2 receives $200,000 from Harry's Auto Parts,Inc.,to air Harry's commercials during a local automotive repair talk show in December 2013.December's ratings drop sharply when the show's star quits to work as a mechanic with a NASCAR team.Shortly thereafter,Harry contacts Channel 2 indicating that he wants to discontinue his sponsorship and requests return of $125,000 of the payment.The station continues to air the commercials and keeps the $200,000.Harry initiates a legal suit to recover the $125,000.Why is the $200,000 included in Channel 2's 2013 gross income?
I.All-inclusive Income Concept.
II.Capital Recovery Concept.
III.Wherewithal-To-Pay Concept.
IV.Claim of Right Doctrine.
V.Constructive Receipt Doctrine.

Question

Quizplus · Accepted Answer

The $200,000 is included in Channel 2's 2013 gross income due to the All-inclusive Income Concept, which includes all income unless specifically excluded, the Wherewithal-To-Pay Concept, which taxes income when the taxpayer has the means to pay, and the Claim of Right Doctrine, which includes income when received without restriction, even if it might have to be repaid.

Television Station Channel 2 Receives $200,000 from Harry's Auto Parts,Inc