Nada Nahhas - Page 13

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          separate bank accounts.  The bank accounts and interest income              
               Harris Bank ARGO                   $1,201.00                           
               Heritage Community Bank            1,086.00                            
               Citibank F.S.B.                    30.00                               
               At trial, petitioner’s attorney during the marital                     
          dissolution proceedings credibly testified that an escrow account           
          was opened that contained funds from both petitioner and Mr.                
          Nahhas.  Ownership of the funds in the escrow account was                   
          transferred to petitioner in 2003 under the December 15, 2003,              
          judgment for final dissolution.  Petitioner confirmed that the              
          escrow account was located at the Harris Community Bank.                    
          Petitioner, however, did not address the ownership of either the            
          Heritage or Citibank bank accounts in 2002.                                 
               It is a general rule of taxation that income is not                    
          constructively received if a taxpayer’s control of its receipt is           
          subject to substantial limitations or restrictions.  See sec.               
          1.451-2(a), Income Tax Regs.  Moreover, it is well established              
          that “gross income” generally refers to assets over which the               
          taxpayer can exercise “dominion and control.”  Ianniello v.                 
          Commissioner, 98 T.C. 165, 173 (1992).  Thus, when amounts are              
          deposited in an escrow account beyond that taxpayer’s reach, they           
          generally are not includable in his gross income.  See, e.g.,               
          Reed v. Commissioner, 723 F.2d 138 (1st Cir. 1983) (no receipt              

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