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 For example, interest credited to a savings account is constructively received even if the taxpayer hasn't withdrawn it.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 ?
The Closing of the Sale: Payment of the proceeds by the buyer for the sale must be made strictly in accordance with the QI's closing instructions or constructive receipt may occur.
Avoiding constructive receipt of unpaid rent from a corporation: D and J are the sole shareholders and directors of P, a cash-method C corporation.
Under the constructive receipt doctrine, receipt by an agent is considered receipt by the principal, here the beneficiary (see Kamm's Estate, 349 F.2d 953 (3d Cir.
The opportunity to elect to forego these benefits will also not result in the constructive receipt of income or wages for employees.
Such plans can lead to the issue of "constructive receipt," subjecting the employer and employees to paperwork hassles and additional income tax obligations.
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.
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.
What is the doctrine of constructive receipt? PLR 201232024
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).
In the American Jobs Creation Act of 2004, Congress imposed additional requirements to avoid constructive receipt. Under IRC Section 409A, a participant may only receive a distribution of previously deferred compensation upon the occurrence of one of six events:
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).
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.
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