Sidney, a cash basis contractor, builds an apartment building for Jerry. The building is completed, and the bill is given to Jerry. Jerry pays $200,000 1/4 of the bill) in 2014. Subsequently, Jerry files suit for damages based on alleged faulty construction. Sidney is required to recognize $200,000 of income in 2014 based upon I. Constructive Receipt Doctrine. II. Claim-of-Right Doctrine. III. Realization Concept. IV. Tax Benefit Rule.

Question

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Sidney must recognize the $200,000 as income in 2014 under the Claim-of-Right Doctrine, as he has received the payment without restriction, and the Realization Concept, as the income is realized when payment is received.

Sidney, a Cash Basis Contractor, Builds an Apartment Building for Jerry