United States v. Basye
United States Supreme Court
410 U.S. 441 (1973)
Medical partnership Permanente (plaintiffs' predecessor) received both direct payments and separate retirement-trust contributions from client Kaiser as compensation for medical services, with the trust maintaining individual tentative accounts for physicians who might forfeit their shares if they failed to meet service requirements; neither Permanente nor its partners reported the trust contributions as income, and the IRS assessed deficiencies against the partners for their proportionate shares, which the partners paid and then sued to recover, winning in the lower courts before the government sought Supreme Court review.
Whether, for federal tax purposes, a partnership's assignment of income is taxable to its partners in the year the income is received by the assignee.