Unico Sales & Marketing, Inc. - Page 4




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          were constructively received by the Foriers when accrued, thus              
          constructively paid and deductible.                                         
                                     Discussion                                       
               Petitioner has dredged up the deeply buried, oft-rejected              
          "constructive payment" doctrine.  Respondent contends petitioner,           
          a cash method taxpayer, may deduct the wages at issue only when             
          actually paid.  Petitioner contends that the Foriers could have             
          drawn the accrued wages when they wished and that they were in              
          constructive receipt of the wages.  Therefore, the argument goes,           
          the doctrine of constructive payment should be applied under                
          these facts, and petitioner should be allowed to deduct the                 
          unpaid accrued wages.  We disagree.                                         
               Respondent's determination is presumed correct, and                    
          petitioner bears the burden of proof.  See Rule 142(a); Welch v.            
          Helvering, 290 U.S. 111 (1933).  Petitioner concedes it is a cash           
          basis taxpayer.  As such, it may only deduct expenditures in the            
          year paid.  See secs. 446, 461; secs. 1.446-1(c)(1), 1.461-                 
          1(a)(1), Income Tax Regs.  While a cash basis taxpayer must                 
          include in income amounts actually or constructively received               
          during the year, see sec. 451 and sec. 1.451-1, Income Tax Regs.,           
          there is no such provision for constructive payment.  It is now             
          horn-book law that "constructive payment" is not a necessary                
          corollary of "constructive receipt," and what may be income to              
          one may not be a deductible payment by the other.  See Citizens             





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