Holden v. Commissioner , 6 B.T.A. 605 ( 1927 )

OPINION.

Phillips :

There is no dispute between the parties that the profit from the sale of the lease was $31,000. It is the contention of the petitioner, however, that such profit was not realized until 1920. The undisputed evidence is that the transaction was completed in 1919 and the assignment of the lease accepted by the purchaser and recorded. Because of the instructions issued to the bank, the payment was not made to petitioner until 1920, and it is his contention that no income was realized until that year. With this contention we can not agree.

The sale was completed in 1919. The purchase price was on deposit with the bank and despite the instructions given the bank to withhold payment, it is our opinion that it became available to the petitioner in that year. No one else had, or claimed to have, any interest in it. It was only because of instructions which had been issued to the bank at the instance of the petitioner that it was not paid. Had such instructions been a part of the contract there might have been some basis for a determination that the money was not received in 1919 by the petitioner, who reported his income upon a cash receipts basis. As to this we express no opinion. Here, however, was no contract or enforcible modification of the original contract; nothing more than an instruction (without consideration) at the request of the petitioner that payment be withheld.

Murchison had no claim to the money after he had accepted the assignment of the lease. The bank had no interest in it. The money was the petitioner’s to do with as he pleased. The fact that he had voluntarily instructed the bank, or caused Murchison to instruct the bank, that the money was not to be paid to him until January 2, 1920, is insufficient in our opinion to prevent the realization of income in the year in which the sale was consummated and the terms of the escrow performed. Thereafter, the bank was the agent of the petitioner only, and its possession of the money, free from any further obligation of the escrow agreement, was possession in the petitioner.

Decision will be entered for the Commissioner.