What defines blocked income for taxpayers?

Blocked income refers to the situation where a taxpayer earns income that, due to local laws, regulations, or restrictions, is not accessible for withdrawal or repatriation. This can happen in foreign countries where there are regulations preventing the transfer of funds out of the country, or where the foreign government has strict controls over foreign exchange. This concept emphasizes the idea that, even though a taxpayer technically has earned this income, they cannot actually access or use it because of legal restrictions in the jurisdiction where the income was generated.

The other options present scenarios that do not encapsulate the definition of blocked income. For example, income earned in foreign currency does not inherently imply that it is blocked; it simply refers to the type of currency, which may or may not be accessible. Similarly, income not reported on tax forms pertains more to compliance issues rather than accessibility. Lastly, income earned but not withdrawn could suggest a variety of situations that do not specifically involve legal restrictions on access. Therefore, the defining characteristic of blocked income lies in its inaccessibility due to local laws.