- 6 - It is well-settled law that interest credited to a taxpayer’s bank account, which is available to the taxpayer upon demand without any restrictions, constitutes gross income in the year such interest is credited to the taxpayer’s account. Petitioners stipulated that the interest at issue was credited to their respective accounts and that they could have withdrawn the interest upon demand without restriction. Sec. 62(a)(9); cf. Kelley v. Commissioner, T.C. Memo. 1991-324 (a taxpayer’s claim that funds in a certificate of deposit were not available until the date of maturity failed because the funds were available for a fee--a penalty for early withdrawal), affd. 988 F.2d 1218 (11th Cir. 1993). The fact that petitioners did not withdraw any of the interest was entirely due to their own volition. See Murphy v. United States, 992 F.2d 929, 931 (9th Cir. 1993) (The taxpayer’s “failure to withdraw his gains immediately was little different from a failure to withdraw interest which has been credited to a bank account. Absent substantial limitations, the interest is taxable, whether withdrawn or not.”). Thus, it is not relevant that petitioners did not have actual receipt of the interest in hand because it is sufficient that they had constructive receipt of it. In view of the foregoing, we sustain respondent’s determination.Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011