the estates under consideration) at or about the time of the preparation and filing of such partial accounts, and where final accounts only are filed (unless unduly protracted), to fix and pay for such services at or about the time of the preparation and filing of such final accounts. Plaintiff, therefore, had it in his power to pay for the 1916 services in 1916, or wait, as he did, in two of the estates until preparation of the partial accounts in 1917, or he might have waited until the preparation of final accounts.
If the 1916 rate had been more favorable to the government than the 1917 rate, it could not, in my opinion, have charged plaintiff the 1916 rate for the 1916 services. Plaintiff had the right and followed the custom in having his 1916 services paid in 1917. The income for the services rendered by plaintiff in 1916 was not "credited to or made available to" plaintiff in 1916. He did not present bills for his 1916 services in 1916, or was there any money credited to him in said estates for such services rendered in 1916.
Constructive payments are not to be inferred in all cases where money is credited to another which he is at liberty to draw upon at any time. In Massachusetts Life Insurance Co. v. United States, 53 S. Ct. 337, 77 L. Ed. , it was held that an insurance company was not entitled to deduct from gross income interest unconditionally credited to policyholders in 1926 which had not been actually withdrawn during that year. The Supreme Court, in an opinion handed down February 6, 1933, by Mr. Justice Roberts, said, page 339 of 53 S. Ct.: "We are referred to a regulation which provides: 'Income which is credited to the account of or set apart for a taxpayer, and which may be drawn upon by him at any time is subject to tax for the year during which so credited or set apart, although not then actually reduced to possession.' It is argued that the regulation requires the policyholder to report interest credited to him as received in the year of credit. The conclusion drawn is that, if the credit is income to the insured, it must constitute a 'constructive payment' by the company. In this view, the transaction is said to come within the term 'paid,' and we may disregard the word 'accrued.' This regulation has, however, not been applied in any case where income has been credited to another by a taxpayer employing the cash receipts and disbursements method of accounting; and specifically it has not been invoked to require policyholders to report as income the dividends or interest credited to them in cases such as this. No tax is demanded of them until actual receipt of the money. The constructive payment theory is, we think, untenable."
Regulation 33 aforesaid, which provides that such income shall be accounted for in the year received "where no determination of compensation is had until the completion of the service" would, in principle, require, where no compensation is fixed until after a part of the services is performed, that such compensation should be accounted for in the year received.
I have examined the cases cited by plaintiff and defendant in their briefs, not any of which are determinative of the issue here involved. I am of the opinion that plaintiff did not constructively receive in 1916 compensation for services rendered by him that year which were paid in 1917. I am also of opinion that the income for such service was not taxable in 1916.
Let an order for judgment be prepared in accordance with the foregoing findings of fact, conclusion of law, and this opinion.
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