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constructively received, (2) due, or (3) earned by performance.
See Johnson v. Commissioner, supra at 459. In the instant case,
all three of these occurred when petitioner received a fee from a
client: It was actually received; it was due under the terms of
the bonding agreement; and it was earned by the execution of the
bond agreement. Thus, the fees were income when received.
Charleston County Court and U.S. District Court Accounts
In Stendig v. United States, supra, the Court of Appeals
held that rental receipts received by an accrual basis
partnership from its housing project but required by the lender
to be deposited into reserve accounts securing repayment to the
lender were nevertheless income to the partnership in the year
deposited. The partners had argued that the amounts were not
income until a later year, when they obtained unrestricted access
to them. The key question for the Court of Appeals was “whether
* * * the partnership acquired the ‘fixed right to receive the
[funds deposited in the] reserves.’” Id. at 165 (quoting
Commissioner v. Hansen, supra). The Court of Appeals held that
the partnership had acquired the fixed right, and hence must
accrue the amounts as income, “in the years of their deposit”
rather than at “the time of actual receipt.” Id. at 166. The
reason was that any use of the funds would inure to the benefit
of the partnership. See id. at 166-167.
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