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Tax.appeal.168, Tax Accountant
Category: Tax
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Experience:  3+ decades of varied tax industry exp. Tax Biz owner
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I inherited some mineral right s and sold them in late Dec.,

Customer Question

I inherited some mineral right s and sold them in late Dec., 2014 but the check wasn't,issued until Jan. 5,2015. Will I be taxed at 2014 or 2015 capital gains?
Submitted: 2 years ago.
Category: Tax
Expert:  Tax.appeal.168 replied 2 years ago.
Welcome. Thank you for choosing us to assist you. My name is ***** ***** my goal is to help make your life, a little... less taxing.
Q: Will I be taxed at 2014 or 2015 capital gains?
A: Based on the IRS Constructive Receipt doctrine, you will be taxed on the capital gains in 2015. SEE BELOW:
Under the cash method, you not only report income in the year it is actually received, you also report income in the year it is constructively received.
Constructive receipt refers to income that you do not have physical possession of but it has been made available to you without restriction. In other words, you have constructive receipt of income when you have control over such income.
(a) General rule. Income although not actually reduced to a taxpayer's possession is constructively received by him in the taxable year during which it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year if notice of intention to withdraw had been given. However, income is not constructively received if the taxpayer's control of its receipt is subject to substantial limitations or restrictions. Thus, if a corporation credits its employees with bonus stock, but the stock is not available to such employees until some future date, the mere crediting on the books of the corporation does not constitute receipt.
Let me know if you require further assistance with this matter.