P was an accrual basis taxpayer. P leased hotel property for a period of ten years. The contract provided that the lessee would pay rents of $30,000 per year during each year of the lease and to pay $30,000 in advance to be applied to the last year of the lease. When the $30,000 advance payment was made in 1949, P reflected it as an advance rental payment under a liability account called deposit on lease account. The lease also provided that in the event the hotel was destroyed, the $30,000 was to be returned less any deductions for past due rent. P was under no restrictions regarding the usage of the monies paid in advance. The IRS determined that the $30,000 was gross income in the year received; under section 22(a).

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