Knowledge Base / Glossary

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Constructive Receipt

Constructive Receipt 
Gross income is constructively received when it is made available without substantial limitations (26 C.F.R. 1.451-2). This means that you don’t have to physically hold cash in your hands to be taxed. For example, if a check for your funds is delivered to you, or if your funds are deposited into your account, you are in constructive receipt of those funds. An investor wanting to defer capital gains taxes under IRC section 1031 cannot take constructive receipt of the proceeds of the sale of the relinquished property. Rather, the proceeds must be held by a Qualified Intermediary.

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Written By: Louis Swingrover

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