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Constructive Receipt

29 July, 2015 - 16:31

Reg. § 1.451-2(a) provides in part:

Constructive receipts of income. – (a) General rule. – Income although not actually reduced to a taxpayer’s possession is constructively received by him in the taxable year during which it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year if notice of intention to withdraw had been given. However, income is not constructively received if the taxpayer’s control of its receipt is subject to substantial limitations or restrictions. ...


Taxpayer Paul Hornung played in the NFL championship game on December 31, 1961. The game was in Green Bay, Wisconsin and ended at 4:30 p.m. The editors of Sport Magazine named him the most valuable player of the game and informed him of this fact. Taxpayer would be given a Corvette automobile, but the editors had neither title nor keys to the automobile at that time. They would present them to taxpayer at a luncheon in New York City on January 3, 1962. Sport Magazine could have presented Mr. Hornung with keys and title on December 31, 1961 – but the automobile was actually in New York.

  • Did taxpayer constructively receive the automobile in 1961? SeeHornung v. Commissioner, 47 T.C. 428 (1967) (acq.).

Taxpayer is a prisoner. The Champion Transportation Services Inc. Profit Sharing and 401(k) Plan mailed a cashier’s check for $25,000 to his personal residence in 1997. A “house-sitter” lived at the residence during the taxpayer’s period of incarceration. Taxpayer had access to a telephone. Taxpayer was released in 1998 and cashed the check at that time.

  • Did taxpayer constructively receive $25,000 in 1997? SeeRoberts v. Commissioner, T.C. Memo. 2002-281, 2002 WL 31618544.