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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their respective accounts and that they could have withdrawn the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interest is taxable, whether withdrawn or not.”).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.
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