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OPINION
1. Portion of Contract Price Deposited in the PLRF
a. Respondent's Theory
Section 451(a) provides that the amount of any item of
income shall be included in gross income for the taxable year
in which received by the taxpayer, unless, under the method of
accounting used in computing taxable income, the amount is
properly accounted for as of a different period. Under the
accrual method of accounting, income is includable for the
taxable year when all the events have occurred that fix the right
to receive the income and the amount of the income can be
determined with reasonable accuracy. Secs. 1.446-1(c)(1)(ii),
1.451-1(a), Income Tax Regs. Generally, all the events that
fix the right to receive income have occurred when it is: (1)
Actually or constructively received; (2) due; or (3) earned by
performance, whichever comes first. Schlude v. Commissioner, 372
U.S. 128 (1963); Union Mut. Life Ins. Co. v. United States, 570
F.2d 382, 385 (1st Cir. 1978); Automobile Club of New York, Inc.
v. Commissioner, 32 T.C. 906, 911-913 (1959), affd. 304 F.2d 781
(2d Cir. 1962).
A line of cases beginning with Commissioner v. Hansen, 360
U.S. 446 (1959), expounds the conditions under which a taxpayer's
right to receive income becomes fixed where payment to the
taxpayer is withheld or deposited in a reserve account. The
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