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1. All-Events Test
a. Application to W.C. Houchin Corp.
Under the all-events test, the fixed right to receive the
income is controlling and not whether there has been actual
receipt of the income. Spring City Foundry Co. v. Commissioner,
292 U.S. 182, 184-185 (1934). Typically, all the events that fix
the right to receive income have occurred when the income is:
(1) Actually or constructively received, (2) due, or (3) earned
by performance. Schlude v. Commissioner, 372 U.S. 128 (1963);
Johnson v. Commissioner, 108 T.C. 448, 459 (1997), affd. in part,
revd. in part and remanded on another ground 184 F.3d 786 (8th
Cir. 1999). When the right to receive a set amount of income
becomes fixed, the income ordinarily accrues. Spring City
Foundry Co. v. Commissioner, supra at 184-185; Resale Mobile
Homes, Inc. v. Commissioner, 91 T.C. 1085, 1093 (1988), affd. 965
F.2d 818 (10th Cir. 1992). An accrual basis taxpayer must report
income in the year the right to such income accrues, despite the
necessity for mathematical computations or ministerial acts.
Contl. Tie & Lumber Co. v. United States, 286 U.S. 290, 295-297
(1932); Dally v. Commissioner, 227 F.2d 724 (9th Cir. 1955),
affg. 20 T.C. 894 (1953); Charles Schwab Corp. & Subs. v.
Commissioner, 107 T.C. 282, 292 (1996), affd. 161 F.3d 1231 (9th
Cir. 1998); Resale Mobile Homes, Inc. v. Commissioner, supra at
1095.
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