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taxes to attach upon the actual (or constructive) receipt of
wages”); Mazur v. Commissioner, 986 F. Supp. 752 (W.D.N.Y. 1997)
(upholding regulation). Compare sec. 1.451-2, Income Tax Regs.,
with sec. 31.3121(a)-2(b), Employment Tax Regs. Petitioner’s
treatment of the Gentrys’ compensation as not constructively
received during its 1994 fiscal year for employment tax purposes
is inconsistent with its claim of constructive receipt for
income tax purposes.
We agree with respondent that petitioner has failed to meet
its burden of proving that Doyce Gentry or his sons
constructively received the compensation prior to the end of
petitioner’s fiscal year. In order to constructively receive
funds, the recipient must have both the power and the right to
withdraw the funds from the taxpayer’s account. Jerome Castree
Interiors, Inc. v. Commissioner, 64 T.C. 564 (1975), affd.
without published opinion 539 F.2d 714 (7th Cir. 1976). Even if
we were to view Mr. Gentry’s and petitioner’s accountant’s
testimony in a light most favorable to petitioner, petitioner
did not comply with the terms of its own bylaws for awarding
compensation by the end of the fiscal year. Petitioner is a
legal entity separate from Mr. Gentry. It must act through
proper corporate procedures. We cannot overlook the lack of
corporate formalities simply because Mr. Gentry had broad power
to control the corporation. Otherwise, as respondent brought
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