New Capital Hotel, Inc. v. Commissioner

New Capital Hotel, Inc. (plaintiff) leased its hotel property for a ten-year term running through 1959, with the lessee paying $30,000 annually and required to prepay the final year's rent in advance. The lessee paid the 1959 rent of $30,000 during 1949, with no restrictions on New Capital's use of the money. As an accrual-method taxpayer, New Capital believed the $30,000 was not taxable until 1959, when it would actually be earned. The Commissioner (defendant) instead taxed the full amount as 1949 income, the year it was received.