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 For example, interest credited to a savings account is constructively received even if the taxpayer hasn't withdrawn it.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 ?
Attorneys required by professional ethics or by the courts to hold fees in trust pending the final disposition of legal proceedings or the approval of the courts normally can avoid the imposition of the constructive receipt doctrine with the substantial limitation argument.
Barriers to the application of the constructive receipt doctrine
Constructive receipt of income is often successfully argued by the IRS to accelerate the recognition of income.
Current developments: in the last year, many significant developments affected individual taxpayers. This article summarizes legislation, the principal residence exclusion, AMT, income recognition, deductions and other significant areas
The opportunity to elect to forego these benefits will also not result in the constructive receipt of income or wages for employees.
Tax-Smart Strategies to Maximize Hurricane Donation Dollars
Thus, McGaugh did not have any control over the shares or the rights associated with them that could give rise to a finding of constructive receipt.
Analysis of and reflections on recent cases and rulings
Shiner contended before the district court that the restrictive endorsement constituted a substantial limitation or restriction that prevented his constructive receipt of the check under Regs.
No tax fraud for issuing Form 1099, Seventh Circuit holds
Importantly, the Tax Court rejected Webber's contention that he could not be taxed on the income realized by the assets within the segregated account because he was not in constructive receipt of the income.
When Surrender Leads to Success
Tax deferment is not achieved if, prior to the actual receipt of payments, the employee is in constructive receipt of the income under the agreement.
Nonqualified deferred compensation plans: What are they and when should they be used?
Under 2-705 there are several ways that the goods are received, including actual physical receipt and constructive receipt (receipt by a third-party bailee).
Sellers beware, as debtors continue the challenge to Section 503(b)(9): anticipate the attack through terms and conditions
In the American Jobs Creation Act of 2004, Congress imposed additional requirements to avoid constructive receipt.
Deferred compensation
This deferral of compensation is not currently taxable to the employee, provided it is subject to a substantial risk of forfeiture (see the discussion of Section 409A on page 535 and Constructive Receipt on page 386).
Deferred compensation
This arrangement will be treated as a like-kind exchange if the intermediary is a "qualified intermediary (55) and the taxpayer is not in constructive receipt of the proceeds on the sale of the relinquished property.
Chapter 30: Like-kind exchanges
Payout options must avoid the triggering of the constructive receipt doctrine-that is, the taxation of benefits before they are actually received by the employee.
Chapter 26: nonqualified deferred compensation
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