Mario is an employee of Flores Company.The company regularly pays its employees by direct deposit on or before the last day of each month.Mario's regular paycheck is deposited on December 31,2016,but Mario was away on vacation and didn't return until January 15,2017.The gross amount of the check is included in Mario's 2016 income.Which of the following concepts or doctrines best explains this treatment?

Question

Quizplus · Accepted Answer

This scenario is best explained by the Constructive Receipt Doctrine, which holds that income is taxable in the year the taxpayer has control over it, even if they do not physically possess it. Mario had the right to receive the paycheck on December 31, 2016, even though he was not physically present to receive it until January 15, 2017. Therefore, the gross amount of the check is included in Mario's 2016 income.

Mario Is an Employee of Flores Company