Robert Henry Lehmuth - Page 9

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         in excluding from gross income the amounts that should have been             
         reported on the form; see, e.g., Neely v. Commissioner, 85 T.C.              
         934, 952 (1985); Fairchild v. Commissioner, T.C. Memo. 2001-237;             
         Rivera v. Commissioner, T.C. Memo. 1994-625; Vaughn v.                       
         Commissioner, T.C. Memo. 1992-317, affd. without published                   
         opinion 15 F.3d 1095 (9th Cir. 1993).  Petitioner has failed to              
         show that the settlement proceeds fall within the purview of any             
         provision of the Code or of law excluding them from gross income.            
         Therefore, the $12,500 that he actually received from Mr. Davis              
         is includable in his gross income.                                           
              We now address the $2,500 settlement payment to which                   
         petitioner was entitled, but which he never actually received.               
              A taxpayer who reports income under the cash method of                  
         accounting must report income for the taxable year when actually             
         or constructively received.  Sec. 1.451-1(a), Income Tax Regs.               
              Income * * * is constructively received by * * * [a                     
              taxpayer] 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. * *                 
         Sec. 1.451-2(a), Income Tax Regs.  Under the constructive-                   
         receipt doctrine, a taxpayer recognizes income when the taxpayer             
         has an unqualified, vested right to receive immediate payment.               
         Martin v. Commissioner, 96 T.C. 814, 823 (1991).  “Generally,                

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