OPINION.
Phillips :
Petitioners kept their' accounts upon the basis of cash receipts and disbursements and are entitled to make their returns upon the same basis. The notes which they received from Baskins were nonnegotiable and, in certain contingencies, were not to be paid. Aside from the contention that no taxable income resulted from the transaction, which question we find it unnecessary to decide, it is urged by them that in the circumstances which here exist no income was received in 1919 because no portion of the notes was paid in that year. This position they seek to sustain on two grounds; first, that the notes were not the equivalent of cash to one on a cash receipts and disbursement basis, since they were nonnegotiable and contingent as to payment and, second, that they are entitled to report any gain on the installment sales basis. Section 1208, Revenue Act of 1926. The application of either, of these methods reaches the same result. It is our opinion that these notes were not the equivalent of cash, that the income of the petitioners is more accurately reflected by accounting for these payments in the year of receipt, and that the Commissioner erred in including thém in income for 1919.
Decision will be entered under Rule 50.