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income for 1999 because it was received “subject to dispute and
possible litigation.”
Discussion
Section 451(a) of the Internal Revenue Code provides that
the amount of any item of gross income shall be included in the
gross income for the taxable year in which received by the
taxpayer unless, under the method of accounting used in computing
taxable income, that amount is to be properly accounted for in a
different period. A taxpayer who reports income under the cash
method of accounting must report income for the taxable year when
it is actually or constructively received. Sec. 1.451-1(a),
Income Tax Regs. Section 1.451-2(a), Income Tax Regs., defines
constructive receipt as follows:
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. * * *
Whether a taxpayer has constructively received income is
essentially a question of fact. Childs v. Commissioner, 103 T.C.
634, 654 (1994), affd. without published opinion 89 F.3d 856
(11th Cir. 1996). We have long held that the doctrine of
constructive receipt is to be applied sparingly and is to be
invoked only when the taxpayer has an unrestricted right to
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