Sivley

This is a proceeding brought by the petitioners to review a decision of the Board of Tax Appeals fixing his income tax for the calendar year 1927. The question involved is that of the tax upon $31,063.02, being that portion of the income of petitioners which represents the compensation of George C. Sivley for the calendar year 1927, thus accruing in 1927, which was paid January 16, 1928. The petitioners treated this income as community income for the calendar year 1927, and George C. Sivley, the husband, reported one half, and his wife, Ada E. Siv-ley, the wife, reported the other half and paid the income tax thereon. The Commissioner held that the salary having been received in 1928 should have been returned in 1928 as part of the income of the petitioners for that year, for the reason that they were reporting income on a cash and not on an accrual basis. It is conceded by petitioners that this ruling is correct.

In view of the fact that the petitioners concede, as they must, that the Commissioner properly treated the salary as a part of the income for the year in which it was received, the only question remaining is as to what effect is to be ascribed to the erroneous inclusion…