When is Gross Income Reportable: Accounting Methods: Claim of Right Flashcards
1
Q
Claim of Right
A
Income is realized When taxpayer recieves it under claim of right (contract damages) with no restrictions.
2
Q
If Plaintiff Must Pay Back Judgment
A
Plainitff can choose: to deduct the repament in the current year OR reopen prior year, determine how much tax he paid on the income in that year, and take that amount as a credit against tax in current year.
