Detailed Answer
(c) The requirement is to determine the amount of
income to be reported in Blair’s 2012 return for the stock received
in satisfaction of a client fee owed to Blair. Since Blair is a
cash method taxpayer, the amount of income to be recognized
equals the $4,000 fair market value of the stock on date of receipt.
Note that the $4,000 of income is reported by Blair in 2012 when
the stock is received; not in 2013 when the stock is sold.