- 8 - 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.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011