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could be paid to petitioner in cash or they could be used to pay
an obligation of petitioner. See Commissioner v. Hansen, 360
U.S. at 465-466. In either case, they would inure to his
benefit. Thus, following Commissioner v. Hansen, supra, and
Stendig v. United States, 843 F.2d 163 (4th Cir. 1988), the
amounts deposited in the in-house account are income in the year
received from clients, notwithstanding their deposit.
For the foregoing reasons, we sustain respondent’s
determination that petitioner must include in gross income the
net increase in the combined balances of the Charleston County
Court and the U.S. District Court accounts in the amount of
$119,000 in 1992 and $91,000 in 1993.7
Section 481 Adjustment
In the notice of deficiency respondent determined that
section 481 applied, and that under section 481, petitioner was
required to include in income the amounts on deposit in the three
accounts as of the beginning of 1992. We agree.
Section 481 provides as follows:
SEC. 481(a). General Rule.--In computing the
taxpayer’s taxable income for any taxable year
(referred to in this section as the “year of the
change”)--
(1) if such computation is under a method of
accounting different from the method under which
the taxpayer’s taxable income for the preceding
taxable year was computed, then
7 See infra note 13.
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