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 2013.Subsequently,Jones files suit for damages based on alleged faulty construction.Alexis required to recognize $60,000 of income in 2013 based upon
I.Constructive Receipt Doctrine.
II.Claim-of-right Doctrine.

Question

Quizplus · Accepted Answer

The claim-of-right doctrine applies because Alexis received the payment without restriction, despite the subsequent lawsuit.

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