Rev. Rul. 59-161

Advice has been requested whether a lump-sum fee paid for the preparation of the final account of an estate by an individual who had served as attorney for the trustees of the estate for several years, may be computed as if the lump-sum compensation had been received ratably over the period of services and, if so, how the fee should be prorated.

For ten years an attorney for the trustees of an estate was paid from income an annual fee covering such matters as servicing, closing and extension of mortgages, preparing the income tax returns of the trust, and for other miscellaneous services. He also received a lump-sum payment for preparing the final account of the trustees.

Section 1301(a) of the Internal Revenue Code of 1954 provides that if an individual or partnership engages in an employment which covers a period of 36 months or more from the beginning to the completion of such employment, and the gross compensation from the employment received or accrued in the taxable year of the individual is not less than 80 percent of the total compensation from such employment, then the tax attributable to any part of the compensation which is included in his gross income shall not be greater than the aggregate of the taxes attributable to such part had it been included in his gross income ratably over that part of the period which precedes the date of such receipt or accrual.

Under section 1301(b) of the Code and section 1.1301-2(b) of the Income Tax Regulations, the term `an employment' means an arrangement or series of arrangements for the performance of personal services by an individual or partnership to effect a particular result regardless of the number of sources from which compensation therefor is obtained.

All the services performed in the instant case, including those for which an annual fee was received, were performed to accomplish one particular result and therefore all of such services fall within the meaning of the term `an employment.'

Accordingly, it is held that a lump-sum payment received by an attorney for the trustees of the estate as a fee for preparing the final formal account of the estate may not be treated separately from other amounts received as attorney for the trustees during the administration of the estate for the purpose of qualifying under section 1301 of the Code.