Question

Constitutive Receipt. Which of the following constitutes constructive receipt in the current year ended December 31?

a. A salary check received at 6pm on 12/31, after all banks have closed.
b. A rent check received on12/30 by the manager of an apartment complex. The manager normally collects the rent for the owner. The owner was out of town.
c. A paycheck received 12/29 that was not honored by the bank because the employer's account did not have sufficient funds.
d. A check received 12/30. The check was postdated 1/2 of the following year.
e. A check received 1/2. The check had been put in the mail on 12/30.

Answer 1

A salary check received at 6pm on 12/31, after all banks have closed, constitutes constructive receipt in the current year ended December 31.

Step-by-step explanation:

Constructive receipt is an accounting concept that determines when income is considered received for tax purposes.

Out of the given options, a. A salary check received at 6pm on 12/31, after all banks have closed, would constitute constructive receipt in the current year ended December 31.

This is because the check was received before the end of the year, even though it couldn't be deposited until the next business day due to bank closures.