Television station Channel 2 receives $200,000 from Harry's Auto Parts,Inc.,to air Harry's commercials during a local automotive repair talk show in December 2016.December's ratings drop sharply when the show's star quits to work as a mechanic with a NASCAR team.Shortly thereafter,Harry contacts Channel 2 indicating that he wants to discontinue his sponsorship and requests return of $125,000 of the payment.The station continues to air the commercials and keeps the $200,000.Harry initiates a legal suit to recover the $125,000.Why is the $200,000 included in Channel 2's 2016 gross income?
I.All-inclusive Income Concept.
II.Capital Recovery Concept.
III.Wherewithal-To-Pay Concept.
IV.Claim of Right Doctrine.
V.Constructive Receipt Doctrine.

Question

Television station Channel 2 receives $200,000 from Harry's Auto Parts,Inc.,to air Harry's commercials during a local automotive repair talk show in December 2016.December's ratings drop sharply when the show's star quits to work as a mechanic with a NASCAR team.Shortly thereafter,Harry contacts Channel 2 indicating that he wants to discontinue his sponsorship and requests return of $125,000 of the payment.The station continues to air the commercials and keeps the $200,000.Harry initiates a legal suit to recover the $125,000.Why is the $200,000 included in Channel 2's 2016 gross income?
I.All-inclusive Income Concept.
II.Capital Recovery Concept.
III.Wherewithal-To-Pay Concept.
IV.Claim of Right Doctrine.
V.Constructive Receipt Doctrine.
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Quizplus · Accepted Answer

The $200,000 is included in Channel 2's 2016 gross income due to the All-inclusive Income Concept, which states that all income is taxable unless specifically excluded, the Wherewithal-To-Pay Concept, which implies that income is recognized when the taxpayer has the means to pay the tax, and the Claim of Right Doctrine, which states that income received is taxable even if there is a dispute over the right to keep it.

Television Station Channel 2 Receives $200,000 from Harry's Auto Parts,Inc