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*808OPINION.

Korner, Chairman:

The petitioner kept his accounts and reported his income on the basis of cash receipts and disbursements. When he sold the 60 shares of stock to Miller and Tulloss he received two things. One was $20,000 (of which $5,000 was cash and $15,000 was United States Government bonds); the other was an agreement that on the 2nd day of the following January, Miller and Tulloss would execute and deliver to petitioner their promissory notes in the amount of $40,000, payable one and two years after date.

The agreement was carried out. Miller and Tulloss executed their notes as they had agreed to do. Petitioner gave back to Miller the passbooks of the latter. This occurred on January 2, 1921. The promissory notes were executed that day and were discharged by payment some time during the year 1921.

The petitioner reported the receipt of $20,000 in his tax return for 1920, and of $40,000 in his tax return for 1921, and reported the profits accordingly. The respondent, in his determination of the deficiency in question here, treated the entire $60,000 as received in 1920 and the entire profit on the transaction as realized in 1920.

When a taxpayer properly accounts on a basis of cash receipts and disbursements, income must be received. Section 213 (a) of the Revenue Act of 1918 provides:

Tie amount of all such items [items included in the term “gross income”] shall be included in the gross income for the taxable year in which received by the taxpayer, unless, under methods of accounting permitted under subdivision (b) of section 212, any such amounts are to be properly accounted for as of a different period.

Section 212 (b) provides that the net income shall be computed in accordance with the method of accounting regularly employed in *809keeping the books of the taxpayer. The petitioner’s regularly employed method was that of cash receipts and disbursements.

The question before us is thus narrowed to the single issue of whether, petitioner received cash or its equivalent in the amount of $60,000 in the year 1920 out of the transaction herein referred to. We do not need to discuss here what would be the effect if he had received the promissory notes of Miller and Tulloss in 1920. The fact is he did not receive such notes until 1921. What he did receive in 1920 was' a promise to execute such notes the following year. In our opinion, this was not the receipt in 1920 of cash or its equivalent.

But it is argued that the promise to execute the notes in futuro was secured by collateral and. that there was thereby a receipt of cash or its equivalent. We do not think so. Under the terms of the agreement, the petitioner had no right to withdraw any moneys on the passbooks of Miller until there had been a default by Miller and Tulloss. There could not be a default by them until January 2, 1921. In the meantime, the passbooks were held by petitioner as the property of Miller, as a pledge. If Miller had placed a diamond ring in petitioner’s hands under the same circumstances, we can not believe that it could be deemed to be income to the petitioner. As a matter of fact, petitioner never had a right, under the agreement, to draw out, dispose of, or reduce to possession the moneys represented by the passbooks, because- Miller and Tulloss did not default their agreement. Accordingly, it was obligatory on petitioner to return the passbooks intact to the petitioner which, in fact, he did in 1921. Since we are here concerned only with the calendar year 1920, it is apparent that there could not have been a default by Miller and Tulloss in that year, nor was there any means by which petitioner could realize or receive income on the passbooks in that year. It is equally true that he did not receive any additional sums by reason of the- promise of Miller and Tulloss to execute and deliver promissory notes in a subsequent year. We do not believe the theory of installment sales has any application here, one way or another. Under any theory, there must be a receipt of something which represents cash or its'equivalent, or which may be made available to the seller as such. In the circumstances of this case, we do not believe these conditions to be met. Even if it should be held that the petitioner received property by reason of the transaction in question, nevertheless, such property had no fair market value at the time of its receipt.

Our opinion is that the petitioner received, in cash or its equivalent in 1920, the amount of $20,000 on the transaction here in question.

Judgment will loe entered on 15 days’ notice, under Rule 50.

GREEN dissents.

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