- 10 - 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. * * *Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011