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that result by claiming that petitioner personally adopted a cash
method of accounting for the fees. However, as discussed above,
the tax accounting treatment of a guaranteed payment is
determined at the partnership level, and a partner’s method of
accounting does not control the time at which a guaranteed
payment is includable in the partner’s income.2 Pratt v.
Commissioner, supra at 212-214. The partnership accounted for
the management fees represented by the $190,000 guaranteed
payment using an accrual method, and petitioner was required to
include the fees in his income when they were included in cost of
goods sold by the partnership based upon the partnership’s method
for reporting the fees. Moreover, even if petitioner had adopted
a cash method of accounting for the fees, that method was
specifically proscribed pursuant to section 706(a) and section
1.707-1(c), Income Tax Regs., and petitioner was entitled to
abandon it without the Commissioner’s consent. North Carolina
Granite Corp. v. Commissioner, 43 T.C. 149, 168 (1964) and cases
cited therein. As was stated in Thomson-King-Tate, Inc. v.
United States, 296 F.2d 290, 294 (6th Cir. 1961):
2
Although petitioners contend that respondent should not be
allowed to rely on the accounting method argument because it was
not timely raised, we need not consider the question because we
reject the argument. We also do not address petitioners’
argument that the management fees were constructively received by
them in the years that they were accrued by the partnership.
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