Constructive Receipt PLR

[Guest ronc]

Apparently, IRS has issued a PLR and ruled that the right of an employee to make an election to receive cash in lieu of vacation in the year before the vacation is earned does not trigger the constructive receipt doctine. The PLR is 100130015, 7/30/2001.

Am I the only one who missed this? Does this mean that the door is open to allow employees who choose to sell next year's PTO and recieve cash (or flexible credits) during the next year, and not impact have any impact on those who choose not to sell PTO?

Obviously, PLRs are only valid for the taxpayer requesting it. However, this seems to be much different than the discussions posted on this board over the last couple years. Interested in the "experts" comments.

[Guest 33fan]

I haven't looked at the PLR, but there's an article on it by one of the authors at Employee Benefits Institute of America. You can get it at EBIA.com, click on "past articles" and then "cafeteria plans"--it's in the 8/2/01 issue. Hope it helps.

[Guest AHayhow]

What if a client allows employees to cash out vacation and PTO only after it has been earned in addition to allowing the time to be carried over from year to year? What are the tax implications for the employees that elect not to cash out? Is that time/salary taxable? Thanks

[Guest tonyb868]

Hi @33fan,

Even i went through that article and found nothing!

I am having the same doubt, hoping for someone to come down and give the answer to @AHayhow!

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