Marta finds a chest inscribed "Jack Sparrow" that contains $750,000 of cash while diving among the coral reefs off Key West, Florida. The US Customs and the DEA denied knowledge of the cash, so Marta keeps it.
I.Recognition will not occur because the windfall would not be considered as "derived from capital or from labor."
II.The All-inclusive Income Concept explains the recognition of the cash as income.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Marta finds a chest inscribed "Jack Sparrow" that contains $750,000 of cash while diving among the coral reefs off Key West, Florida. The US Customs and the DEA denied knowledge of the cash, so Marta keeps it.
I.Recognition will not occur because the windfall would not be considered as "derived from capital or from labor."
II.The All-inclusive Income Concept explains the recognition of the cash as income.
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A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

The All-inclusive Income Concept states that all income, whether derived from capital or labor, should be included in gross income. Therefore, statement II is correct. Statement I is incorrect because finding a large sum of money hidden among the coral reefs is not considered windfall income but rather taxable income under the All-inclusive Income Concept.

Marta Finds a Chest Inscribed "Jack Sparrow" That Contains $750,000