Constructive Receipt

Constructive Receipt

About Constructive Receipt:

Constructive Receipt of Income is a doctrine under which a taxpayer is required to include in gross income amounts that, though not actually received, are deemed to have been received during the tax year. Thus income is constructively received when it is credited without restriction and made available to a taxpayer. Former Tax Regulation (check if this Reg. is current here) §1.451-2.

Example of Constructive Receipt:

Learn more about tax examples, explanations and calculations here.

Charles received a dividend check in the mail on December 20, 1994, but didn't deposit it until January 1995. The money was constructively received in 1994 and became part of Charles's taxable income for that year.

A concept of tax law that taxes income at the time the taxpayer could have received it, even if the taxpayer don't actually have it. A paycheck the taxpayer could pick up in December is considered constructively received and taxed in that year, even if the taxpayer don't get and cash the check until the following January. Also, interest paid on a savings account is considered constructively received and taxable in the year it is credited to his or her account, regardless of whether the taxpayer withdraw the money.

A paycheck the taxpayer get in December is considered constructively received and taxed in that year, even if the taxpayer do not cash it till January.

See Dividend in the American Legal Encyclopedia and Dividend in the World Legal Encyclopedia.

Description and Definition of Constructive Receipt

A tax rule that taxes income which is not received by you but which you may draw upon. You have received income when it is available to you, regardless of whether you actually take possession of it.


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