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Whether a taxpayer constructively received income is a question
of fact. Willits v. Commissioner, 50 T.C. 602, 613 (1968).
According to petitioners’ interpretation of the facts,
although Mr. Menard was the president and controlling shareholder
of Menards and had the power to order Menards to distribute funds
to him, Mr. Menard did not have an unqualified, vested right to
receive the interest in 1998. Petitioners also contend that even
though Menards was financially able to pay Mr. Menard in 1998,
Menards did not set the funds aside for that purpose.
In support of their position, petitioners rely on Jerome
Castree Interiors, Inc. v. Commissioner, 64 T.C. 564 (1975),
affd. without published opinion 539 F.2d 714 (7th Cir. 1976). In
Jerome Castree Interiors, Inc., which involved section 267 and
transactions between related taxpayers, the taxpayer-
corporation’s president and his brother, both cash basis
taxpayers, reported bonuses that had accrued in the preceding
year on their tax returns for the year in which the bonuses were
paid. During the accrual year, the total amount of bonuses to be
awarded had not been allocated among the individual officers.
However, on its tax return for that year, the taxpayer-
corporation, an accrual basis taxpayer, deducted the total bonus
amount. We held in Jerome Castree Interiors, Inc. that the
taxpayer-corporation’s president and his brother did not
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