Unformatted text preview: ChrisNotes 4 - 3 THE ECONOMIC BENEFIT DOCTRINE. The economic beneﬁt doctrine (EBD) applies to BOTH cash-basis
and accrual-basis taxpayers. EBD answers the question, “what?”—i.e., What is the nature of the property received? Is it “economic” income or corpus? Recall the
3 balance sheet equation: I “A = L + 0E, ” where,
; A = Assets.
L = Liabilities.
0E = Owners Equity Anything that increases OE is economic income, including the
I unexpected payment of one’s liabilities by an employer. The
* amount of income is based on the fair market value of the property received. However, note that economic income is NOT necessarily taxable income if: ‘ 0 Specifically excluded by Congress;
0 Not constructively received (refer to the Constructive Receipts Doctrine); 0 Assigned along with the corpus (refer to the Assignment of Income
Doctrine); or 0 Representing the recovery of expenses that were not previously deducted
(re er to the Tax Bene its Doctrine). Chapter 4 ...
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- Spring '09