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the execution of the July 1995 amendment. At trial and on brief,
it is respondent’s position that Mr. Palmer also constructively
received during 1995 the amount of nonemployee compensation that
Olin Ordnance owed to him with respect to his approved monthly
invoices 0016 through 0020 covering the period from the execution
of the July 1995 amendment to the end of 1995. However, respon-
dent does not seek an increased deficiency for 1995 with respect
to that contention. Petitioners counter that Mr. Palmer did not
constructively receive during 1995 any amount of nonemployee
compensation from Olin Ordnance.
Before turning to the constructive receipt issue before us,
we shall summarize the principles of the doctrine of constructive
receipt. Section 1.451-2, Income Tax Regs., entitled “Construc-
tive receipts of income”, provides in pertinent part:
(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 avail-
able 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. How-
ever, income is not constructively received if the
taxpayer’s control of its receipt is subject to substan-
tial limitations or restrictions. * * *
The constructive-receipt doctrine requires a taxpayer who is
on the cash method of accounting to recognize income when the
taxpayer has an unqualified, vested right to receive immediate
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