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subsidiary, however, was not paid immediately. Then, in 1990
after petitioner had liquidated the subsidiary, petitioner
received Lot 51 as compensation. Neither the subsidiary nor
petitioner ever included in income the earnings from these
services, but prior to trial petitioner conceded that it received
$112,000 of services income for 1990 upon the receipt of Lot 51.
Nevertheless, petitioner did not concede negligence.
According to the regulations, income accrues "when all events
have occurred which fix the right to receive such income and the
amount thereof can be determined with reasonable accuracy." Sec.
1.451-1(a), Income Tax Regs. It is unclear why petitioner
conceded that the service income accrued during a year in issue
and not when petitioner's subsidiaries performed the work in the
mid-1980s. The record does not disclose the terms of the service
contract or the specific services performed, nor does it disclose
why IML delayed payment. We therefore hold that respondent
failed to prove that petitioner is liable for the negligence
penalty attributable to the receipt of Lot 51.
To reflect the above,
Decision will be entered
under Rule 155.
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