. T realizes $100,000 of income in Year 1. b. T doesn’t realize any income in Year 1 because he had a legal obligation to repay the money at the time he took it. c. T realizes $100,000 of income when the embezzlement is discovered in Year 2, but only if he doesn’t repay it in that year. d. None of the above.
T embezzles $100,000 from his employer in Year 1. The embezzlement is
discovered during the course of an audit in Year 2, at which time T repays the money in
full.
a. T realizes $100,000 of income in Year 1.
b. T doesn’t realize any income in Year 1 because he had a legal obligation to
repay the money at the time he took it.
c. T realizes $100,000 of income when the embezzlement is discovered in Year 2,
but only if he doesn’t repay it in that year.
d. None of the above.
While shopping at a flea market in Year 1, T bought a simple jewelry box for $20.
When T got home with her new purchase, she discovered that the box had a hidden
compartment which contained an emerald ring. She then immediately had the ring
appraised by an expert on emerald jewelry and learned that it was worth $5,000. T sold
the ring to her mother for $4,000 in Year 2.
a. There are virtually no cases dealing with the recognition of income for noncash
or non-bullion “treasure trove.”
b. T would be required to recognize $4,980 of income in Year 1 if, instead of the
ring, she had found $5,000 in cash
c. T would be required to recognize $5,000 of income in Year 1 if, instead of the
ring, she had found $5,000 in cash.
d. Both (a) and (c) are correct.
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