Question

The constructive receipt doctrine requires that income be recognized when it is made available to the cash basis taxpayer, although it has not been actually received. The constructive receipt doctrine does not apply to accrual basis taxpayers.

A. True
B. False

Answer 1

True,The constructive receipt doctrine requires that income be recognized when it is made available to the cash basis taxpayer, although it has not been actually received. The constructive receipt doctrine does not apply to accrual basis taxpayers.

Step-by-step explanation:

The statement is TRUE. The constructive receipt doctrine requires that income be recognized when it is made available to the cash basis taxpayer, even if it has not been actually received. This means that if the taxpayer has control over the income and could have received it, then it is considered constructively received and must be recognized as income. However, the constructive receipt doctrine does not apply to accrual basis taxpayers, as they recognize income when it is earned or due, not when it is actually received. Accrual basis taxpayers follow the accrual accounting method, which matches revenues and expenses to the time periods in which they are incurred, regardless of when the cash is exchanged.