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CCH (cch.taxgroup.com) reports:

A settlement award payment was includible in an individual's income, even though it was subject to a creditor's claim in the individual's bankruptcy proceeding. The taxpayer argued that she did not exercise dominion and control over the award because it was placed in a trust account and could not be accessed without a court order. However, her argument ignored the fact that she volunteered to place the award in the bankruptcy trustee's custody. Thus, while she did not "constructively receive" the award in the year at issue; she "actually" received it. Further, the doctrine of constructive receipt generally addresses when, not whether, income is realized by a cash basis taxpayer. Finally, the taxpayer was entitled to a miscellaneous itemized deduction in an amount equal to the amount includible in her income.
CCH Comment. The taxpayer actually reported the income on her tax return for the year at issue on line 21 and subtracted it on the same line with the explanation that the amount was not "constructively received." The IRS, however, proceeded as if the income was not reported.
S.J. Burns, TC Memo. 2007-271, Dec. 57,094(M)
Other References:
Code Sec. 61
CCH Reference - 2007FED ¶5504.2642
Code Sec. 451
CCH Reference - 2007FED ¶21,005.743
Tax Research Consultant
CCH Reference - TRC INDIV: 33,164