Perry Funeral Home, Inc. - Page 10

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          is warranted by its pertinence to the Court’s analysis of                   
          petitioner’s case.                                                          
          II.  General Rules                                                          
               A.  Federal Taxation Principles                                        
               The Internal Revenue Code imposes a Federal tax on the                 
          taxable income of every corporation.  Sec. 11(a).  Section 61(a)            
          specifies that gross income for purposes of calculating such                
          taxable income means “all income from whatever source derived”.             
          Encompassed within this broad pronouncement are all “undeniable             
          accessions to wealth, clearly realized, and over which the                  
          taxpayers have complete dominion.”  Commissioner v. Glenshaw                
          Glass Co., 348 U.S. 426, 431 (1955).  Stated otherwise, gross               
          income includes earnings unaccompanied by an obligation to repay            
          and without restriction as to their disposition.  James v. United           
          States, 366 U.S. 213, 219 (1961).                                           
               Section 451(a) provides the following general rule regarding           
          the year in which items of gross income should be included in               
          taxable income:                                                             
                    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.                                                      
          Consistent with the principle of section 451, section 446(a) and            
          (b) directs that taxpayers are to compute taxable income using              
          the method of accounting regularly employed for keeping their               

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