Alfred E. Gallade - Page 18

                                       - 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.  * * *                        

          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

Last modified: May 25, 2011