Tax Research - Constructive Receipt Essay

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Pages: 5

FACTS: Adrian is a salesperson who represents several wholesale companies. On January 2, 2008, she received by mail a commission check from Ace Distributors in the amount of $10,000 that was dated December 31, 2007. Adrian is concerned about the year in which the amount of $10,000 is taxable. Although the check is dated 2007, she contends that it would have been unreasonable for her to drive 100 miles (one way) to the Ace offices on the eve of a holiday to collect her check. Further, Adrian maintains that even if she had made the trip to collect the check, by the time she returned home, the bank would have closed and she could not have deposited the check until January.
Does Adrian include the $10,000 on her 2007
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It was determined by the court that Kuhler having received the check following the end of banking hours on the 31st did not constitute a substantial limitation or restriction, and Kuhler was required to include his commission check among income for 1946.

It is stated in the Adrian case, however, that in order to pick up the check herself prior to December 31, she would have had to drive over 100 miles to the Ace offices. An analogous situation is provided by McEuen v. Commissioner of Internal Revenue 196 F.2d 127 (1952), in which a taxpayer living in Florida was made aware of an available check in offices located in Cleveland. With this distance in mind, the taxpayer, McEuen, opted to receive the check, dated December 30, 1943, by mail in 1944. McEuen then included the amount of the check in income for 1944, contending that the unreasonable distance he would have had to travel to pick up the check himself provided a substantial limitation or restriction on receipt of the income. The tax court, however, ruled that geography played little role in the passing of constructive receipt, and required that McEuen record the amount as income for 1943.

The most directly analogous example to the Adrian case is provided by Baxter v. Commissioner of Internal Revenue Service 816 F.2d 493 (9th Circuit,