James W. and Laura L. Keith - Page 19




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          represented closed sales in the year entered.  See Arnold v.                
          Commissioner, a Memorandum Opinion of this Court dated Mar. 17,             
          1953.  We see no reason to infer differently here.                          
               B.  Reporting of Gain--Timing of Inclusion                             
               Thus, having decided that petitioners’ contracts for deed              
          effected a completed sale when executed, we proceed to the                  
          question of when gain from such sales must be included in gross             
          income.  The general rule for the taxable year of inclusion is              
          set forth in section 451(a):  “The amount of any item of gross              
          income shall be included in the gross income for the taxable year           
          in which received by the taxpayer, unless, under the method of              
          accounting used in computing taxable income, such amount is to be           
          properly accounted for as of a different period.”  Regulations              
          then specify as follows:                                                    
               Under an accrual method of accounting, income is                       
               includible in gross income when all the events have                    
               occurred which fix the right to receive such income and                
               the amount thereof can be determined with reasonable                   
               accuracy. * * * Under the cash receipts and                            
               disbursements method of accounting, such an amount is                  
               includible in gross income when actually or                            
               constructively received. * * * [Sec. 1.451-1(a), Income                
               Tax Regs.]                                                             
          Taxable income, in turn, generally “shall be computed under the             
          method of accounting on the basis of which the taxpayer regularly           
          computes his income in keeping his books”, with the exception               
          that “if the method used does not clearly reflect income, the               








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