constructive receipt

Constructive receipt

The date a taxpayer receives dividends or other income, for use in the determination of taxes.

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constructive receipt

Receipt of items considered to be income for a given tax period even though payment is not received until later. For example, a dividend paid and mailed on December 30, 2003, but not received by stockholders until after the first of the following year is considered taxable income for 2003 because the stockholders are considered to have constructive receipt of the dividend.

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constructive receipt

An IRS concept that the unrestricted right to receive money is the same as actually receiving it for purposes of calculating income. This has nothing to do with accrual methods of accounting versus cash methods of accounting, but, rather, with timing of depositing checks and similar concepts. 

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Constructive Receipt

A cash-basis taxpayer is taxed on income only as it is received. But if the income was unreservedly subject to his or her demand and he or she could have received it but chose not to do so, it is regarded as having been constructively received by him or her and is taxable. For example, interest credited to a savings account is constructively received even if the taxpayer hasn't withdrawn it.