[1] A taxpayer is subject to tax in the current year if he or she has unfettered control in determining when items of income will or should be paid.
The full text of the IRS regulation defining constructive receipt states as follows:[2] Income although not actually reduced to a taxpayer's possession is constructively received by him in the taxable year during which it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year if notice of intention to withdraw had been given.
[3] The court stated that for income to be constructively received, the funds must be made available to the taxpayer without substantial limitations.
[3] The court held that this lack of notice, under the circumstances, meant that she faced substantial limitations on the availability of the funds and that they were not constructively received during the first tax year.
[4] Paul Hornung, a football player for the Green Bay Packers, won a Corvette as a prize on December 31, 1961, for his performance in the 1961 NFL Championship Game.
[5][6] In Veit I, as part of redoing his employment contract, the taxpayer agreed to defer receiving a bonus that he was owed until the next year.