Near year-end, FGH Construction Corporation mailed E, a plumbing contractor, a $10,000 check for services that he had performed on one of the corporation's projects.On December 27 of this year, the controller of FGH called E and asked E not to cash the check until after the first of the year, because there were insufficient funds in the bank to cover it.E must include the $10,000 as income this year.

Question

Quizplus · Accepted Answer

E does not have to include the $10,000 as income this year because he did not have unrestricted access to the funds due to the request to delay cashing the check. Income is recognized when it is actually or constructively received, and in this case, it was not constructively received.

Near Year-End, FGH Construction Corporation Mailed E, a Plumbing Contractor