Identify the rule that states that income has been realized when a taxpayer receives the income and there are no restrictions on the taxpayer's use of the income (e.g., no obligation to repay the amount).
A)Claim of right
B)Constructive receipt
C)Return of capital principle
D)Wherewithal to pay
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

The Claim of Right doctrine states that income has been realized when a taxpayer receives the income without restrictions on its use, indicating the taxpayer has full control over the funds, thus recognizing it as income for tax purposes.

Identify the Rule That States That Income Has Been Realized