For purposes of determining gross income, which of the following is true?

a. A mechanic completed repairs on an automobile during the year and collects money from the customer. The customer was not satisfied with the repairs and sued the mechanic for a refund. The mechanic can defer recognition of the income until the suit has been settled.
b. A taxpayer who finds a wallet full of money is required to recognize income even though someone may eventually ask for the return of the money.
c. Embezzlement proceeds are not included in the embezzler's gross income because the embezzler has an obligation to repay the owner.
d. All of these are false.
e. All of these are true.

b
RATIONALE: Under the claim of right doctrine, the person who finds property, and has free and unrestricted use of the property, has realized an increase in wealth and must include the found property in his or her gross income.