- 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 NextLast modified: May 25, 2011