Constructive receipt refers to situations where income can be used despite the fact that this money has not yet been physically received. ... Taxpayers must include any income on their taxes based on the year that income was constructively received, even if they don't have possession of the funds.

When should an income considered constructively received?

What Is Constructive Receipt? Constructive receipt is determined by when the person who receives the income first gains control over that income. 1 An individual or company is considered to have control over income when it is credited to that entity.

What is the difference between actual receipt and constructive receipt?

For federal income tax purposes, the doctrine of constructive receipt is used to determine when a cash-basis taxpayer has received gross income. ... Unlike actual receipt, constructive receipt does not require physical possession of the item of income in question.