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necessary. Respondent determined that section 481 applied, and
that petitioner was required to include in income in 1992 the
combined balance of the three accounts as of January 1, 1992;
namely, $555,909. In addition, respondent determined that
petitioner was required to include in income the net increases in
the combined balances of the Charleston County Court and U.S.
District Court accounts in the amount of $119,000 in 1992 and
$91,000 in 1993.
OPINION
Section 446(b) provides as follows: “If no method of
accounting has been regularly used by the taxpayer, or if the
method used does not clearly reflect income, the computation of
taxable income shall be made under such method as, in the opinion
of the Secretary, does clearly reflect income.” For an accrual
method taxpayer, “it is the right to receive accrual basis
income, not its actual receipt, that determines the time of its
inclusion as gross income.” Stendig v. United States, 843 F.2d
163, 165 (4th Cir. 1988) (citing Commissioner v. Hansen, 360 U.S.
446, 464 (1959)); see Johnson v. Commissioner, 108 T.C. 448, 459
(1997), affd. in part, revd. in part and remanded on another
ground 184 F.3d 786 (8th Cir. 1999); 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 the earliest of
the following occurs: The income is (1) actually or
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