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award in a tortlike action and not backpay; and the income is an
unauthorized withdrawal from her pension plan.
The amount of any item of gross income shall be included in
the taxable year in which it is actually or constructively10
received by the taxpayer. See sec. 451(a); sec. 1.451-1(a),
Income Tax Regs. Amounts owed to cash basis taxpayers are not to
be included in the taxpayers’ income unless it appears that the
money was available to them, the payor was able and ready to pay
them, their right to receive the money was not restricted, and
their failure to receive the cash resulted from the exercise of
their own choice. See Basila v. Commissioner, 36 T.C. 111,
115-116 (1961).
The district made two attempts to pay petitioner for the
backpay and interest on backpay during 1992. Checks were
initially issued to petitioner in February of 1992 and
subsequently voided by the district because petitioner did not
10Sec. 1.451-2(a), Income Tax Regs., defines the term
“constructive receipt” as follows:
(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. * * *
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Last modified: May 25, 2011