2005 Chapter 11 - Agricultural Issues

2005 WorkbookChapter 11: Agricultural Issues and Rural Investments39311 Chapter 11: Agricultural Issues and Rural InvestmentsINTRODUCTIONI ncome that a cash-basis taxpayer has the power to control is considered income regardless of whether it is actuallyreceived. Such income is treated as accrued by an accrual-basis doctrine of constructive receipt is a basic element of federal income tax law and is frequently litigated inagriculture. From a tax accounting standpoint, income indirectly arises from the passage of value to a taxpayerrepresenting additional wages, fees, dividends, rents, or gain on sale of an asset. This value is usually in some formother than cash or without a cash deposit, such as a corn sale applied to an operating note. It is easy to miss these itemsin a system that deals with dollars. This is particularly the case for cash-basis taxpayers who think primarily in termsof dollars received in REGULATIONST reas. Reg. specifies that: income is constructively received when it is credited to the taxpayer s account, set apart for the taxpayer, madeavailable so the taxpayer would have drawn on it or could have drawn upon the amount if notice of intent to withdrawhad been given.

2005 Workbook Chapter 11: Agricultural Issues and Rural Investments 395 11 any time after the grain is delivered. In this case, the sale is 2004 income.

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