What does constructive receipt mean on the CPA exam?
Constructive receipt. Income is taxed when it is made available without substantial restriction, not when it is collected. A check left uncashed in a drawer is still income.
Defined against Treas. Reg. 1.451-2.
Which CPA exam sections use constructive receipt?
Constructive receipt appears in the REG section of the CPA exam.
Related terms
- nonresident alien: An individual who is neither a United States citizen nor a resident under the green card or substantial presence tests.
- grantor trust: A trust whose income is taxed to the person who created it, because they kept too much control.
- net income: What is left after every revenue and expense of the period, including tax and discontinued operations.
- statute of limitations: The window in which the Service may assess more tax, normally three years from filing, extended to six for a substantial omission of income and unlimited for a false return or none at all.