Pennsylvania
How Eisner v. Macomber applies in Pennsylvania: state-specific rules, key cases, and bar exam notes for Tax Law.
Pennsylvania law follows the principle established in Eisner v. Macomber, recognizing that income is not realized and thus not taxable until it is actually received or constructively received. The state endeavors to maintain a consistent application of this principle in assessing income tax liability.
In Pennsylvania, income is subject to tax only when it is actually or constructively received, not merely when it is credited or due.
The Pennsylvania Supreme Court affirmed that for tax purposes, income may only be taxed when realized, adhering to the principles established in Eisner v. Macomber.
The court held that future profits on an unrealized venture were not taxable until actually realized, reflecting the non-recognition of contingent income.
The court determined that tax liability arises only on amounts received, upholding when and how income is recognized in tax assessments.
While both federal and Pennsylvania tax law recognize income is taxable upon realization, Pennsylvania emphasizes constructive receipt more strictly. Federal law has broader definitions which may consider amounts due at times that Pennsylvania does not, potentially leading to discrepancies in tax liabilities.
Knowledge of the principles established in Eisner v. Macomber is vital for understanding Pennsylvania income tax implications, making it a relevant topic for the Pennsylvania bar exam.