For purposes of determining gross income, which of the following is true? a. A mechanic completed repairs on an automobile during the year and collects money from the customer. The customer was not satisfied with the repairs and sued the mechanic for a refund. The mechanic can defer recognition of the income until the suit has been settled. b. A taxpayer who finds a wallet full of money is required to recognize income even though someone may eventually ask for the return of the money. c. Embezzlement proceeds are not included in the embezzler's gross income because the embezzler has an obligation to repay the owner. d. All of these are false. e. All of these are true.

Question

George Miller

Business

7 May, 01:17

For purposes of determining gross income, which of the following is true? a. A mechanic completed repairs on an automobile during the year and collects money from the customer. The customer was not satisfied with the repairs and sued the mechanic for a refund. The mechanic can defer recognition of the income until the suit has been settled. b. A taxpayer who finds a wallet full of money is required to recognize income even though someone may eventually ask for the return of the money. c. Embezzlement proceeds are not included in the embezzler's gross income because the embezzler has an obligation to repay the owner. d. All of these are false. e. All of these are true.

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Answers (1)

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Mila · Answer 1

Letter b is correct. A taxpayer who finds a wallet full of money is required to recognize income even though someone may eventually ask for the return of the money.

Explanation:

This question is correct because its principles are related to correct doctrine. This doctrine is recognized by United States tax law on the principle that a taxpayer who receives income, even if he is not entitled to it, must qualify income as received. So in this case, even if a person has found an income that is not his property, he must by law include that property in his gross income.