Constructive Receipt

Constructive receipt is a tax doctrine that says even though a taxpayer might not have actual possession of money, they have constructively received the money if it has been set aside, credited to an account or otherwise is available without limitation to the taxpayer. Money held in a plaintiff attorney’s trust account that belongs to the personal injury victim is constructively received for tax purposes. This concept is important because once triggered; the plaintiff forever loses the ability to structure his or her settlement and possibly could lose public benefits.