Constructive Receipt

arrived on Friday. I did not check the mail on Saturday. It was present Jan 3 in the mail.

receipt in 2012?

Examining the envelope more closely, it wasn't really "postmarked" by the USPS on the 29th; rather that was the date stamped by the company's postal meter. So I can't really tell when it was actually delivered to the Post Office.

arrived on Friday. I did not check the mail on

receipt in 2012?

Had you found it Saturday and deposited it immediately, when would your bank have cleared it?

Seth

The USPS has a firm rule that the date in the meter stamp must be the actual date the item is mailed. Back when I had a meter, if I mailed something the next morning, the PO told me to go back and put on another $.00 meter stamp with the right date.

So you should assume it really was mailed on the 29th. No advice to offer on which year it arrived, though.

R's, John

arrived on Friday. I did not check the mail on

receipt in 2012?

I generally use an electronic deposit method, wherein I scan the check at home for deposit at my bank (which is not local). Here is their funds availability statement for these types of deposits:

1. Availability of Funds. You agree that items transmitted using the Services are not subject to the funds availability requirements of Federal Reserve Board Regulation CC. Funds deposited using the Services will be available after USAA receives payment for the funds submitted. USAA may make such funds available sooner based on such factors as credit worthiness, the length and extent of your relationship with us, transaction and experience information, and such other factors as USAA, in its sole discretion, deems relevant.

So there is no definite time stated.

The general rule is that an on-demand negotiable financial instrument is considered to create constructive receipt upon actual receipt. There are various sets of facts and circumstances that create exceptions to the general rule. But almost all exceptions work in favor of the IRS.

A check is an on-demand negotiable financial instrument. Upon receipt, you can endorse it and pay a creditor with it regardless of the time it takes to clear the Federal Reserve System. You can also cash it at the payor's bank, at a currency exchange, or with a friend. So the issue is the date of receipt.

On 31 December 1982, I was handed a check by a client at around 11:30pm and said, with a smile, "I should've mailed it to me." Like it or not it was 1982 income.

In your case, it looks like 2012 income. How you note that on your

Dick

In the past, I've just reported it in the year I felt I had constructive receipt. On occasion, I've been questioned by the IRS about the mismatch between the 1099 and my reported income -- that automatic letter they send out. They've always accepted my explanation/reconciliation. Years ago, I could do that by telephone; but in recent years they require it in writing.

There is a particular issue for me in that I do NOT want to report it as income on my Schedule E and then back it out; having to do with thresholds for NH Bus Profits Tax. That may not be an issue in the future as NH has changed some of the rules re BPT. So this year, it won't make any monetary difference to me when I report it.

I've read that story of yours, and I feel for you.

On one hand, it was an unexpected increase in 1982 income. OTOH, it was a gesture of kindness because if my invoice had gone into the AP system, a check wouldn't have been issued for at least 28 days. Clients that concerned are hard to find.

Dick