Question

Clyde is a cash-method taxpayer who reports on a calendar-year basis. This year Paylate Corporation has decided to pay Clyde a year-end bonus of $1,000.
Determine the amount Clyde should include in his gross income this year under the following circumstances:
a. Paylate Corporation wrote the check and put it in his office mail slot on December 30 of this year, but Clyde did not bother to stop by the office to pick it up until after year-end.
Amount to be included:
b. Paylate Corporation mistakenly wrote the check for $100. Clyde received the remaining $900 after year-end.
Amount to be included:
c. Paylate Corporation mailed the check to Clyde before the end of the year, (and it was delivered before year end). Although Clyde expected the bonus payment, he decided not to collect his mail until after year-end.
Amount to be included:
d. Clyde picked up the check in December, but the check could not be cashed immediately because it was postdated January 10.
Amount to be included:

Answer 1

Answer:

A) $1,000: the constructive receipt doctrine states that if the income is not subject to limitations or restrictions, then it should be taxed as soon as it was available, not necessarily when it was received.  

B) $100: he only received $100, this year, the rest was given to him on the following year.

C) $1,000: since Clyde received the mail before the end of the year, the constructive receipt doctrine applies.

D) $0: the constructive receipt doctrine does not apply due to the restriction of the check being postdated.