Philip L. Firetag - Page 8




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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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