The Claim-Of-Right Doctrine I

question 117

Multiple Choice

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. differs from the constructive receipt doctrine in that constructive receipt applies where II. III. an amount has been received, and the tax question is whether the amount is taxable in the current year. explains why Samuel reports $45 of interest credited to his savings account on December 31, 2014, on his 2014 tax return, even though he does not actually receive the cash in 2014. IV. applies when a taxpayer has no definitive obligation to repay the amount received.

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

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Definitions:

Natural Monopolies

Market structures where a single firm can supply a good or service to an entire market at a lower cost than two or more firms, typically due to high fixed costs.

Creative Accounting

The manipulation of financial records and reports to present a more favorable view of a company's business activities.

Economic Substitution

The act of replacing one product with another due to changes in price, preferences, or other factors, reflecting the flexibility of consumption choices.

Industrial Regulation

Refers to government rules and laws that control how businesses can operate within certain industries to ensure fairness, safety, and competitiveness.