What could explain Freda willingness to spread her salary

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Problem - Freda is a cash basis taxpayer. In 2019, she negotiated her salary for 2020. Her employer offered to pay her $21,000 per month in 2020 for a total of $252,000. Freda countered that she would accept $10,000 each month for the 12 months in 2020 and the remaining $132,000 in January 2021. The employer accepted Freda's terms for 2020 and 2021.

Required -

a. Did Freda actually or constructively receive $252,000 in 2020?

b. What could explain Freda's willingness to spread her salary over a longer period of time?

c. In December 2020, after Freda had earned the right to collect the $132,000 in 2020, the employer offered $133,000 to Freda at that time, rather than $132,000 in January 2021. The employer wanted to make the early payment so as to deduct the expense in 2020. Freda rejected the employer's offer. Was Freda in constructive receipt of the income in 2020? Explain.

Reference no: EM132628241

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