Miele v. Commissioner
United States Tax Court
Pursuant to Pennsylvania's Code of Professional Responsibility, petitioners' cash method calendar year law partnership transferred client advances to a special bank account. Held, the law firm is in constructive receipt of the earned portion of the advances held in the account at the end of 1972. Held, further: Respondent's change in the firm's method of accounting under sec. 481, I.R.C. 1954, approved.
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Pursuant to Pennsylvania's Code of Professional Responsibility, petitioners' cash method calendar year law partnership transferred client advances to a special bank account. Held, the law firm is in constructive receipt of the earned portion of the advances held in the account at the end of 1972. Held, further: Respondent's change in the firm's method of accounting under sec. 481, I.R.C. 1954, approved. Petitioner Fierro deducted a business bad debt in 1971 resulting from a stock sale. Held, he is entitled only to capital loss treatment in 1971 for his adjusted basis of the stock.
1Opinion of the Court
Wiles, Judge:
Respondent determined the following deficiencies in petitioners’ income taxes:
Docket No. Petitioner Calendar year Deficiency
6228-75 Anthony D. Miele and
Matilda F. Miele. 1971 $298
1972 8,968
6230-75 Patrick H. Fierro and Evelyn Fierro. 1971 19,989
1972 25,571
After concessions, the three remaining issues are:(1) Whether petitioners’ law firm, which utilizes a cash receipts and disbursements method of accounting, may defer recognition of client advances from 1972 to 1973 where the advances were received and held, in part, in a special bank account in 1972 and transferred to its…
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