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the years in issue represent cash received from the Soviet Union
during the years of the deposits. Petitioner argues, however,
that most of the amounts he received during the taxable years
under consideration were constructively received in 1985.7
A taxpayer reporting income on the cash method of
accounting, such as petitioner, must include an item in income
for the taxable year in which the item is actually or
constructively received. See sec. 451(a). The concept of
constructive receipt is well established in tax law. The courts
have regularly looked to section 1.451-2(a), Income Tax Regs.,
for the following definition of the term “constructive receipt”:
(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.
* * *
7 At trial, petitioner testified that he constructively
received but fraudulently failed to report the illicit income for
1985. He explained that if he had reported the income on his
Federal income tax return, his illicit and secret relationship
with the Soviet Union would have been revealed. We note that
petitioner’s concession may have placed him at a disadvantage
irrespective of our holding here. For example, if petitioner
fraudulently failed to report income for 1985, the period for
assessment would not have expired for 1985. See sec. 6501(c)(1).
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