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Key tax principle governing the ability to delay the taxation of nonqualified deferred compensation. Under the constructive receipt doctrine, cash-basis taxpayers owe taxes either (1) when they receive compensation or (2) before they have actually received the compensation if they have full rights to the compensation without any risk of forfeiture. Because NQDC is subject to risks from corporate insolvency and the company’s creditors in a bankruptcy, no taxes are triggered until the money is distributed. If all risks were eliminated, the IRS would determine that you had “constructively received” the compensation even if it had not yet been paid to you. See the Taxes section of this website and the FAQ on the rules and principles that allow the deferral of tax on income.