The Claim-of-Right Doctrine
I.explains why Carla does not report $10,000 of income on her tax return when she borrows $10,000 from the First Savings Bank.
II.differs from the constructive receipt doctrine in that constructive receipt applies where an amount has been received, and the tax question is whether the amount is taxable in the current year.
III.explains why Samuel reports $45 of interest credited to his savings account on December 31, 2018, on his 2017 tax return, even though he does not actually receive the cash in 2018.
IV.applies when a taxpayer has no definitive obligation to repay the amount received.

Question

The Claim-of-Right Doctrine
I.explains why Carla does not report $10,000 of income on her tax return when she borrows $10,000 from the First Savings Bank.
II.differs from the constructive receipt doctrine in that constructive receipt applies where an amount has been received, and the tax question is whether the amount is taxable in the current year.
III.explains why Samuel reports $45 of interest credited to his savings account on December 31, 2018, on his 2017 tax return, even though he does not actually receive the cash in 2018.
IV.applies when a taxpayer has no definitive obligation to repay the amount received.
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Quizplus · Accepted Answer

The claim-of-right doctrine applies when a taxpayer receives income but does not have a definite obligation to repay it. This explains why Carla does not report $10,000 of income on her tax return when she borrows it from the First Savings Bank. Statement II is incorrect because constructive receipt applies when an amount has been made available to the taxpayer, whether or not it has actually been received, and its taxability in the current year is being questioned. Statement III is incorrect because it refers to the doctrine of constructive receipt, not the claim-of-right doctrine.

The Claim-Of-Right Doctrine I.explains Why Carla Does Not Report $10,000 of Income on of Income