Question

Jill 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. Jill must recognize $4,000 of gross income from the stock for the current year.
a) true
b) false

Answer 1

Answer:

a) true

Explanation:

Since in the question it is mentioned that the stock is received with the value of $4,000 and at the closing of the year the stock value is decreased to $2,000

But she continue to hold the stock and record $4,000 of the gross income from the stock

So at the time of income receipt, the realizable value is $4,000

Therefore the given statement is true