Lloyd Patterson and Charlene Patterson v. Commissioner of Internal Revenue

This is an appeal by the taxpayers, husband and wife, from a decision of the United States Tax Court (TC Memo 1973 — 39) determining a deficiency in income tax for calendar year 1969 for which they filed a joint return on the cash basis. As pointed out by the Tax Court, the only issue between the parties is whether appellants constructively received in 1969 an $18,000 payment which was actually received on January 5, 1970.

The Pattersons were residents of Idaho, where Lloyd Patterson (hereinafter “Patterson”) engaged in farming. On June 17, 1969, he entered into a “Potato Growing Agreement” and a “Modification-Agreement” with J. R. Simplot Company for services on his land consisting of growing, harvesting, and storing potatoes, with compensation to be based on quantity and quality of the potatoes grown and stored. Key provisions of the “Modification-Agreement” are as follows:

The potato crop governed by the aforesaid agreements was harvested during the fall of 1969 and was stored in Patterson’s storage facilities. Delivery of the potatoes occurred as follows:

Payments for the above were received by Patterson from the Company as follows:

On January 3, 1970, Patterson…