In Which of the Following Will the Constructive Receipt Doctrine

question 135

Multiple Choice

In which of the following will the Constructive Receipt Doctrine require reporting income in 2013?
I.Cornell's December 2013 salary check is withheld until January 15,2014,because the employer does not have sufficient cash to cover its December payroll.
II.Donnie is an employee of Holt Corporation.The corporation regularly mails payroll checks to employees to arrive on or before the last day of each month.Donnie's check arrives in the mail at his house on December 31,2013.However,Donnie was vacationing in Cancun and did not return until January 8,2014.Donnie deposited the check into his account the next day.
III.In December 2013,Cory signs a contract to play basketball for the Rhythms.He receives a signing bonus of $2,000,000 to be paid over 5 years beginning in 2014.His regular salary of $800,000 will be paid monthly during the season that begins in 2014.

• A)Statements I, II, and III are correct.
• B)Statements II and III are correct.
• C)Statements I and II are correct.
• D)Only statement II is correct.
• E)Only statement III is correct.

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Definitions:

Unlever

The process of reducing or eliminating debt from a company's balance sheet, often aiming to improve financial stability.

Loan Out

The process where an individual or company provides services through a third-party entity to minimize liability and often to gain tax efficiencies.

Repurchase Shares

The buying back of a company's own shares from the marketplace, which can increase shareholder value by reducing the number of outstanding shares.

Debt-Equity Ratio

The ratio that delineates the usage of shareholder equity and debt in the financing of company assets.