The constructive receipt doctrine requires that income must be recognized when it is made available to the cash basis taxpayer, although it has not been actually received. The constructive receipt doctrine does not apply to accrual basis taxpayers.

Question

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The statement is correct. The constructive receipt doctrine is only applicable to cash basis taxpayers, and not to accrual basis taxpayers. Accrual basis taxpayers must recognize income when it is earned, regardless of whether or not they have actually received the payment.

The Constructive Receipt Doctrine Requires That Income Must Be Recognized