Question

"Tax Implications"

• Your client, Jack, has asked about the differences between the constructive receipt doctrine and the claim of right doctrine.
• Explain what each doctrine is by providing an example to help Jack understand the differences.

Claim of right doctrine - judicial doctrine that states that income has been realized if a taxpayer receives income and there are no restrictions on the taxpayer's use of the income (for example, the taxpayer does not have an obligation to repay the amount).

Constructive receipt doctrine - the judicial doctrine that provides that a taxpayer must recognize income when it is actually or constructively received. Constructive receipt is deemed to have occurred if the income has been credited to the taxpayer's account or if the income is unconditionally available to the taxpayer, the taxpayer is aware of the income's availability, and there are no restrictions on the taxpayer's control.

What are some examples of each of these doctrines?

Answer 1