- 3 -
During August 1997, while petitioner was still admitted in
the Center, a $19,893.904 distribution check was received from
the Plan at petitioner’s Hawthorne residence. The distribution
was received in the form of a cashier’s check.
On November 13, 1997, petitioner was released from the
Center and concurrently reconfined in the Los Angeles county jail
to serve the remainder of his sentence. Petitioner was released
from jail in February 1998 and during May of that year he cashed
the $19,893.90 distribution check. Petitioner did not report the
distribution as income on his 1997 Federal income tax return.
OPINION
The question we consider is whether petitioner
constructively received the $24,867.37 distribution during his
1997 tax year. Section 451(a) provides the general rule that
“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,
such amount is to be properly accounted for as of a different
period.” Petitioner, who reports his income using the cash
method, must report income in the year it is actually or
constructively received. See sec. 1.451-1(a), Income Tax Regs.
4 Respondent determined that the gross distribution of
$24,867.37 was unreported income. The net distribution, after
withholding $4,973.47 for Federal tax, was $19,893.90.
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Last modified: May 25, 2011