Keller v. Commissioner

Tannenwald, Chief Judge, concurring: I fully agree with the majority opinion. I do not believe that anything in my concurring opinion in Van Raden implies that the approach embodied in Rev. Rui. 75-152, 1975- 1 C.B. 144 , or in the cattlefeed cases, generally, could not or should not be applied in other situations. I merely emphasized in that opinion that cattlefeed cases were sui generis, but that was not intended to imply that none of the rationale in those cases could be utilized in other situations.

I believe it important that there be no misunderstanding as to the Court’s position. Payments for personal services clearly fall within the definition of IDC. See sec. 1.612-4(a), Income Tax Regs. In holding, as the majority does in this case, that they were properly allocable by a cash basis taxpayer to the period of the rendition of the services, it is important to understand that this action is taken in this case in the context of a situation where the provider of the services was already committed to render such services without any advance payment and such payment was made by the petitioner without any contractual requirement or business purpose to do so. Depending upon the circumstances, such an allocation may be inappropriate where the advance payment is a condition for a commitment to render personal services imposed in good faith, and for good reason, by the person who is to perform the services. See Bonaire Development Co. v. Commissioner, 679 F.2d 159 (9th Cir. 1982), affg. 76 T.C. 789 (1981). Indeed, the contrast between the majority’s treatment of the advance payments in connection with the turnkey drilling contracts and their treatment of the Amarex Funds well charges clearly indicates the distinction which I am suggesting.

Irwin and Whitaker, JJ., agree with this concurring opinion.