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 2017.Subsequently,Jerry files suit for damages based on alleged faulty construction.Sidney is required to recognize $200,000 of income in 2017 based upon
I.Constructive Receipt Doctrine.
II.Claim-of-Right Doctrine.
III.Realization Concept.
IV.Tax Benefit Rule.

Question

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 2017.Subsequently,Jerry files suit for damages based on alleged faulty construction.Sidney is required to recognize $200,000 of income in 2017 based upon
I.Constructive Receipt Doctrine.
II.Claim-of-Right Doctrine.
III.Realization Concept.
IV.Tax Benefit Rule.
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Quizplus · Accepted Answer

Sidney must recognize the $200,000 as income in 2017 under the Claim-of-Right Doctrine, as he has received the payment without restriction, and the Realization Concept, as the income is realized when the payment is received.

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