Identify the Rule That States That Income Has Been Realized

question 155

Multiple Choice

Identify the rule that states that income has been realized when a taxpayer receives the income and there are no restrictions on the taxpayer's use of the income (e.g., no obligation to repay the amount) :

• A) Claim of right
• B) Constructive receipt
• C) Return of capital principle
• D) Wherewithal to pay
• E) None of the above

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Definitions:

Squeeze-Out

A strategy or action taken by majority shareholders to pressure minority shareholders into selling their shares.

Dividends

Payments made by a corporation to its shareholders from the company's profits or reserves.

Double Derivative Suit

A legal action brought by a shareholder on behalf of a parent company against a subsidiary for harm done to the parent company.

Derivative Action

A lawsuit brought by a corporation's shareholder on behalf of the corporation against a third party, often its executives or directors, for misconduct.