Pennsylvania Code › Title 61 - REVENUE › Part I - Department of Revenue › Subpart B - General Fund Revenues › Article V - Personal Income Tax › Chapter 101 - GENERAL PROVISIONS › Section 101.7 - Receipt of income

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
General rule.
An amount, the privilege of receiving which is
					 taxable, shall be considered as received in the year in which it is actually or
					 constructively received unless includable for a different year in accordance
					 with the method of accounting of the taxpayer. Under an accrual method of
					 accounting, income shall be includable in gross income when all the events have
					 occurred which fix the right to receive the income and the amount thereof may
					 be determined with reasonable accuracy. Therefore, under such a method of
					 accounting if, in the case of compensation for services, no determination may
					 be made as to the right to the compensation or the amount thereof until the
					 services are completed, the amount of compensation is ordinarily income for the
					 taxable year in which the determination can be made. Under the cash receipts
					 and disbursements method of accounting, such an amount shall be includable in
					 gross income when actually or constructively received. Where an amount of
					 income is properly accrued on the basis of a reasonable estimate and the exact
					 amount is subsequently determined, the difference, if any, shall be taken into
					 account for the taxable year in which the determination is made. To the extent
					 that income is attributable to the recovery of bad debts for accounts charged
					 off in prior years, it shall be includable in the year of recovery in
					 accordance with the method of accounting of the taxpayer regardless of the date
					 when the amounts were charged off. If a taxpayer ascertains that an item should
					 have been included in gross income in a prior taxable year, he should file an
					 amended return and pay an additional tax due. Similarly, if a taxpayer
					 ascertains that an item was improperly included in gross income in a prior
					 taxable year, he should, if within the period of limitation, file a claim for
					 credit or refund of an overpayment of tax arising therefrom.
(b)
Special rule in case of
					 death.
The taxable year of a taxpayer ends on the date of his death.
					 See §
											117.3 (relating to deceased
					 individuals). In computing taxable income for the year, there shall be included
					 only amounts properly includable under the method of accounting used by the
					 taxpayer. However, if the taxpayer used an accrual method of accounting,
					 amounts accrued only by reason of his death may not be included in computing
					 taxable income for the year. If the taxpayer uses no regular accounting method,
					 only amounts actually or constructively received during the year shall be
					 included.
(c)
Constructive
					 receipt of income.
Income although not actually reduced to possession
					 shall be 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. However, income may not be constructively
					 received if the control by the taxpayer of its receipt is subject to
					 substantial limitations or restrictions. Therefore, if a corporation credits
					 its employees with bonus stock, but the stock is not available to the employees
					 until some future date, the mere crediting on the books of the corporation does
					 not constitute receipt. In the case of interest, dividends or other earnings
					 credited in respect of a deposit or account in a bank, building and loan
					 association, savings and loan association, or similar institution, the
					 following are not substantial limitations or restrictions on the control by the
					 taxpayer over the receipt of the earnings:
(1)
					 A requirement that the deposit or account and the earnings thereon shall be
					 withdrawn in multiples of even amounts.
(2) A requirement that a notice of intention
					 to withdraw shall be given in advance of the withdrawal.