Sainte Claire Corporation - Page 9

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               The first issue we consider is whether, during 1988, Sainte            
          Claire constructively received the principal of the 1968 note.6             
          Section 451(a) provides that any item of gross income received by           
          a taxpayer is to be included in the gross income for the taxable            
          year in which received, unless the item is to be properly                   
          accounted for during a different period pursuant to the                     
          taxpayer's method of accounting.  Section 1.451-1(a), Income Tax            
          Regs., provides that taxpayers using the cash receipts and                  
          disbursements method of accounting, which Sainte Claire did                 
          during relevant times, shall include in gross income amounts when           
          actually or constructively received.  Section 1.451-2(a), Income            
          Tax Regs., describes the doctrine of constructive receipt as                
          follows:                                                                    
               Income although not actually reduced to a taxpayer's                   
               possession is constructively received by him in the                    
               taxable year during which it is credited to his                        
               account, set apart for him, or otherwise made available                
               so that he may draw upon it at any time, or so that he                 

          5  (...continued)                                                           
          Sec. 1.1374-1A(c)(1)(i)(A), Income Tax Regs.  See generally                 
          Warrensburg Bd. & Paper Corp. v. Commissioner, 77 T.C. 1107                 
          (1981).  The exception provided by former sec. 1374(c)(1) does              
          not apply to Sainte Claire.                                                 
          6  In briefing this issue, both parties discuss Vaughn v.                   
          Commissioner, 81 T.C. 893 (1983), modified 87 T.C. 164 (1986);              
          however, neither party notes that this Court subsequently                   
          reconsidered its holding that the taxpayer had constructively               
          received the proceeds of an installment sale.  Vaughn v.                    
          Commissioner, 87 T.C. 164, 167 (1986), modifying 81 T.C. 893                
          (1983).  In reconsidering that holding, this Court also stated              
          that the discussion of constructive receipt in the earlier                  
          opinion should be disregarded.  Id. at 168 n.2.  Accordingly, we            
          do not consider the opinion cited to us by the parties.                     




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