cases involving accrual basis taxpayers
Automobile Club of Mich. vs. Comm. 353 US 180 (1957)
Membership dues received one year in advance by an automobile club were includible in income in the year received by an accrual basis taxpayer because the dues were held under a claim of right without restriction of their disposition.
Comm. vs. Indianapolis Power & Light Co. 110 S. Ct. 589 (1990)
The U.S. Supreme Court made a distinction between the taxation of refundable deposits. The Court confirmed advance payments are generally taxable and defined "advance payments" as a non-refundable payment. With a nonrefundable payment the payee is "guaranteed" it can keep the money as long as the payee performs its own obligation under the contract.
Schlude vs. Comm. 372 US 128 (1993)
Prepaid lesson fees were includible in income by an accrual-basis dance studio in the year of receipt and not pro rata over the period during which the lessons were to be given. However, contract installments not becoming due and payable during the year (and not secured by note) were not taxable in that year if the lessons had not yet been given.
