. Define the term constructive receipt. Explain its importance.

b. Explain three restrictions on the concept of constructive receipt.

a. Define the term constructive receipt. Explain its importance.

A.

Under the concept of constructive receipt, income is taxed when it is received by the taxpayer. The taxpayer can transfer the income to another person to avoid paying taxes.

B.

Under the concept of constructive receipt, income is taxed once earned but not received by the cash-basis taxpayer. The taxpayer cannot defer the tax by refusing to accept payment.

C.

Under the concept of constructive receipt, income is taxed when it becomes available to the taxpayer. The taxpayer cannot defer the tax by refusing to accept payment.

D.

Under the concept of constructive receipt, income is taxed once earned and received by the cash-basis taxpayer. The taxpayer can defer the tax by refusing to accept payment.

b. Explain three restrictions on the concept of constructive receipt.

Income is not constructively received if:
1.
2.
3.