In 2015,Juan,a cash basis taxpayer,was offered $3 million for signing a professional baseball contract.He counter offered that he would receive $900,000 per year for 4 years beginning in 2016.The team accepted the counteroffer.Juan constructively received $3 million in 2015.

Question

Quizplus · Accepted Answer

Since Juan is a cash basis taxpayer, he would only recognize income when actually received. Therefore, even though he negotiated the contract in 2015, he did not receive any income until 2016 when he began receiving his annual payments. So, he did not constructively receive $3 million in 2015.

In 2015,Juan,a Cash Basis Taxpayer,was Offered $3 Million for Signing