Judy is a cash basis attorney.In 2014,she performed services in connection with the formation of a corporation and received stock with a value of $4,000 for her services.By the end of the year,the value of the stock had decreased to $2,000.She continued to hold the stock.Judy must recognize $4,000 of gross income from the stock for 2014.

Question

Quizplus · Accepted Answer

Judy must recognize the income that relates to the services she rendered in 2014.Therefore,Judy must recognize gross income of $4,000 in 2014.The decline in value of the stock is not deductible because the loss has not been realized.

Judy Is a Cash Basis Attorney