Tim purchased State of Idaho general-purpose bonds at a cost of $3,400 in 2016. He receives $170 interest on the bonds in 2016, 2017, and 2018. In 2018, he sells the bonds for $3,800. Tim excludes the bond interest, but must include a $400 capital gain in his 2018 gross income. Which of the following Concepts, Constructs, and/or Doctrines help in forming the basis for this treatment?
I.Constructive Receipt Doctrine.
II.All-inclusive Income Concept.

Question

Tim purchased State of Idaho general-purpose bonds at a cost of $3,400 in 2016. He receives $170 interest on the bonds in 2016, 2017, and 2018. In 2018, he sells the bonds for $3,800. Tim excludes the bond interest, but must include a $400 capital gain in his 2018 gross income. Which of the following Concepts, Constructs, and/or Doctrines help in forming the basis for this treatment?
I.Constructive Receipt Doctrine.
II.All-inclusive Income Concept.
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Quizplus · Accepted Answer

The All-inclusive Income Concept is relevant here because it requires taxpayers to include all realized income, including capital gains, in their gross income. The Constructive Receipt Doctrine, which deals with income taxpayers have access to but choose not to take possession of, does not apply in this scenario.

Tim Purchased State of Idaho General-Purpose Bonds at a Cost