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430 (1955). The Court concluded that the payments in dispute in
Glenshaw Glass Co. constituted gross income, describing them as
“undeniable accessions to wealth, clearly realized, and over
which the taxpayers have complete dominion.” Id. at 431.
Section 451 sets forth the general rule that an item of
income shall be included in the taxpayer's gross income for the
taxable year in which received by the taxpayer unless, under the
method of accounting used by the taxpayer in computing taxable
income, such amount is to be properly accounted for in a
different period. Westpac was an accrual method taxpayer. Under
the accrual method of accounting, income is included in gross
income when all events have occurred which fix the right to
receive such income and the amount thereof can be determined with
reasonable accuracy. See sec. 1.451-1(a), Income Tax Regs. The
right to receive income becomes fixed at the earliest of (1)
required performance, (2) the date payment becomes due, or (3)
the date payment is made. See Schlude v. Commissioner, 372 U.S.
128, 133, 137 (1963); Charles Schwab Corp. v. Commissioner, 107
T.C. 282, 292 (1996), affd. 116 F.3d 1231 (9th Cir. 1998); Cox v.
Commissioner, 43 T.C. 448, 456-457 (1965).
Pursuant to the above-described principles, Westpac was
required to include the advance trade discounts in income for the
taxable year in which such discounts were received. Westpac had
unfettered use of the cash payments in the years in which
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