constructive receipt


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Constructive receipt

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

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.

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. 

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 For example, interest credited to a savings account is constructively received even if the taxpayer hasn't withdrawn it.
References in periodicals archive ?
An employee who agrees prior to earning income that the income will be paid in a later period does net have constructive receipt of the income, as the Department properly acknowledged in its 1999 Opinion.
The court determined the Sinyards were in constructive receipt of the money paid to Winthrop & Weinstine.
There is no constructive receipt if the taxpayer's control is subject to substantial limits or restrictions.
Under the principle of constructive receipt, if the employer gives the employee a choice between tax-free benefits and cash or another taxable benefit, the employee must pay income tax on the cash (or the value of the other taxable benefit).
10) Taxation is deferred so long as the employee is not in constructive receipt under Treas.
Constructive receipt (a meaningful concept only to a cash-basis taxpayer) means: If a taxpayer has it or can get his or her hands on it, it is taxable.
The IRS could consider the benefit exchange a taxable event if it violates the doctrines of constructive receipt, economic benefit or assignment of income.
If the allowance were available to the retiree in the earlier year, the issue would be one of constructive receipt and would be considered to have received it and be taxable on it in the year it was accrued.
She said conforming 403(b) plan rules with 401(k) rules for amounts earned but not yet available would be difficult because they take into account constructive receipt regulations that apply throughout the code.
Specifically, to defer taxation to the employee of the promised but unpaid sums, a nonqualified deferred compensation plan must comply with the separate but related tax doctrines of constructive receipt and economic benefit.
The proper facilitation of exchanges by these third-party providers ensures that participants in an LKE program are not in actual or constructive receipt of funds.
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