Revenue Ruling 60-31
Internal Revenue Service
1960-1 C.B. 174 (1960)
In January 1958, an executive entered a five-year employment contract with a corporation. The contract provided that the executive would receive an annual salary and be entitled to additional compensation of $10x each year. The additional compensation was to be credited to a bookkeeping reserve account and would be deferred, accumulated, and paid in five annual installments. The reserve payments were to begin if (1) the corporation terminated the executive’s employment, (2) the executive became a part-time employee of the corporation, or (3) the executive became totally or partially incapacitated. The employment agreement obligated the corporation to make the payments when due, but there was no intent for the corporation to hold the reserve amounts in trust for the executive. In a separate scenario, a football player entered into a two-year contract with a football club in June 1957. The contract provided for the football player to receive a salary and a $150x signing bonus. The contract provided that the player would receive the $150x bonus upon signing, contingent upon the club’s payment of the $150x to an escrow agent designated by the football player. The parties also executed an escrow agreement pursuant to which the club agreed to pay $150x to the escrow agent and the escrow agent agreed to pay that amount, plus interest, to the football player in installments over five years. The escrow account bore the football player’s name, and payments from the account could be made only in accordance with the terms of the escrow agreement. Both the executive and the football player utilized the cash-receipts-and-disbursements method of accounting. The Internal Revenue Service issued a revenue ruling to clarify when the executive’s additional compensation and the football player’s signing bonus were includible in the respective taxpayers’ gross incomes.
Rule of Law
Holding and Reasoning ()
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 707,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 707,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.