Question

Judy is a cash basis attorney. This year, she performed services in connection with the formation of a corporation and received stock with a value of $4,000 for her services. By the end of the year, the value of the stock had decreased to $2,000. She continued to hold the stock. Judy must recognize $4,000 of gross income from the stock for the current year.

a. true
b. false

Answer 1

Judy must recognize $4,000 of gross income from the stock for the current year.

True

Step-by-step explanation:

When you receive stock in lieu of cash for payment for services rendered. you'll first owe income tax based on the value of the stock at that time.