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I agree that all income is taxable, IRC 61. A cash basis…

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I agree that all income...
I agree that all income is taxable, IRC 61. A cash basis taxpayer reports income when received. My research in the FTPS indicates that each employee has a separate account (Working Time Guarantee Fund) in his or her name and can get the money in the account
The money is put in the account by the employer at the rate of 8% of the employees compensation. Their is a long history of changes, but the money is used to finance investments in housing and infrastructure and sanitation.
the money is only available to the employee only if certain events take place. It sounds like a combination of unemployment compensation, severance pay and retirement to me. All of which if distributed from a separate fund to an employee would be taxable income. I can give you cites if you want.
Saying when he employee earned it, is not enough for individual tax basis taxpayers in my opinion, but if you have a Revenue Ruling, PLR, TAM or other authority I am interested in seeing them.
As far as I can tell there is no tax treaty with Brazil.
I want to be wrong. Please convince me that I am.
Submitted: 7 months ago.Category: Tax
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11/20/2017
Tax Professional: Lev, Tax Advisor replied 7 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,984
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Working Time Guarantee Fund is based on Brazilian statutes - correct?
As I know - there is nothing similar in the US - but we will need somehow to classify these funds under the US statute...

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Tax Professional: Lev, Tax Advisor replied 7 months ago

The point here - if funds are NOT available for the employee - they are not considered as received.

The IRS is using so-called "constructive receipt" doctrine

https://www.law.cornell.edu/cfr/text/26/1.451-2

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.

Based on your information - amounts deposited into the Working Time Guarantee Fund should not be considered as constructively received by the employee because of restrictions and are only considered as constructively received and included into gross income when become available for the employee.

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Tax Professional: Lev, Tax Advisor replied 7 months ago

I appreciate if you take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all Social Security / Tax related issues.
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