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OPINION
The principal issue presented for decision in the instant
case is whether petitioners must include in their income for
taxable year 1987 the $190,000 payment1 petitioner received from
the partnership during 1987. Petitioners bear the burden of
proof. Rule 142(a).
Petitioners contend that the $190,000 payment represents a
guaranteed payment that is includable in their income in the
years that the partnership accrued the management fees payable to
petitioner. The period of limitations on assessment has expired
for the taxable years in which the accruals would have been
reportable by petitioners. Respondent contends that, even
assuming that the $190,000 payment represents a guaranteed
payment, petitioner had adopted the cash method of accounting to
report the payment, and, therefore, the payment is includable in
petitioners’ income in the year of receipt. We agree with
petitioners.
For purposes of respondent’s argument on brief, respondent
assumes that the $190,000 payment constitutes a guaranteed
payment and does not dispute petitioner’s contention that it is a
guaranteed payment. Although respondent has not expressly
1
We sometimes refer to a $190,000 payment and sometimes to
management fees. The term “190,000 payment” denotes the total of
the accrual management fees that were paid to petitioner during
1987.
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Last modified: May 25, 2011