- 18 - Next, we decide in which year petitioner, a cash basis taxpayer, was required to report the Plan distribution. Respondent argues that petitioner should recognize the distribution in 1986; i.e., when it was paid to GCI. Section 1.451-1(a), Income Tax Regs., provides that “income [is] to be included in gross income for the taxable year in which [it is] actually or constructively received by the taxpayer” (emphasis added). See also sec. 451(a). The taxpayer here is petitioner Mr. Gallade, not GCI. We must decide whether Mr. Gallade, the taxpayer, actually or constructively received his distribution in 1986, as respondent contends, or in 1985, as respondent argues in the alternative. Section 1.451-2(a), Income Tax Regs., concerning constructive receipt as interpreted in Hornung v. Commissioner, 47 T.C. 428, 434 (1967), provides that 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. * * * 7(...continued) v. Earl, 281 U.S. 111 (1930). In this regard, because we have held that the total distribution was taxable to petitioner in 1986 under sec. 61(a)(11), it is unnecessary to discuss the parties’ assignment-of-income argument, which is another theory under which petitioner’s income could be taxable. Id.Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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