Carter v. Commissioner
United States Tax Court
40 T.C.M. 654 (1980)
Relevant factsFree
Carter (plaintiff), a cash-basis taxpayer who worked for New York City in late 1974, wasn't paid for four weeks of that work until January 3, 1975, due to payroll delays; because he'd been unemployed most of 1974, reporting that income in 1974 would have generated no additional tax, but he reported it in 1974 anyway. The IRS (defendant) assessed a deficiency, determining the income belonged on his 1975 return, and Carter appealed, arguing he had constructively received the income in 1974.
IssueFree
Whether a cash-basis taxpayer must report gross income in the taxable year it is actually or constructively received, even where the income was earned for services performed in an earlier year.