What follows is an opinion from the Supreme Court of the United States. Your task is to identify the federal agency involved in the administrative action that occurred prior to the onset of litigation. If the administrative action occurred in a state agency, respond "State Agency". Do not code the name of the state. The administrative activity may involve an administrative official as well as that of an agency. If two federal agencies are mentioned, consider the one whose action more directly bears on the dispute;otherwise the agency that acted more recently. If a state and federal agency are mentioned, consider the federal agency. Pay particular attention to the material which appears in the summary of the case preceding the Court's opinion and, if necessary, those portions of the prevailing opinion headed by a I or II. Action by an agency official is considered to be administrative action except when such an official acts to enforce criminal law. If an agency or agency official "denies" a "request" that action be taken, such denials are considered agency action. Exclude: a "challenge" to an unapplied agency rule, regulation, etc.; a request for an injunction or a declaratory judgment against agency action which, though anticipated, has not yet occurred; a mere request for an agency to take action when there is no evidence that the agency did so; agency or official action to enforce criminal law; the hiring and firing of political appointees or the procedures whereby public officials are appointed to office; attorney general preclearance actions pertaining to voting; filing fees or nominating petitions required for access to the ballot; actions of courts martial; land condemnation suits and quiet title actions instituted in a court; and federally funded private nonprofit organizations.

Opinion:
SCHLUDE et ux. v. COMMISSIONER OF INTERNAL REVENUE.
No. 80.
Argued December 10, 1962.
Decided February 18, 1963.
Carl F. Bauersfeld argued the cause for petitioners. With him on the briefs was Robert Ash.
Assistant Attorney General Oberdorfer argued the cause for respondent. With him on the brief were Solicitor General Cox and Harry Baum.
Dean Acheson, Fontaine C. Bradley, John T. Sapienza, Robert L. Randall and Alvin Friedman filed briefs for the American Institute of Certified Public Accountants, as amicus curiae, urging reversal.
Mr. Justice White
delivered the opinion of the Court.
This is still another chapter in the protracted problem of the time certain items are to be recognized as income for the purposes of the federal income tax. The Commissioner of Internal Revenue increased the 1952, 1953 and 1954 ordinary income of the taxpayers by including in gross income for those years amounts received or receivable under contracts executed during those years despite the fact that the contracts obligated taxpayers to render performance in subsequent periods. These increases produced tax deficiencies which the taxpayers unsuccessfully challenged in the Tax Court on the ground that the amounts could be deferred under their accounting method. On appeal, the Court of Appeals for the Eighth Circuit agreed with the taxpayers and reversed the Tax Court, 283 F. 2d 234, the decision having been rendered prior to ours in American Automobile Assn. v. United States, 367 U. S. 687. Following the American Automobile Association case, certiorari in this case was granted, the judgment of the lower court vacated, 367 U. S. 911, and the cause remanded for further consideration in light of American Automobile Association. 368 U. S. 873. In a per curiam opinion, the Court of Appeals held that in view of American Automobile Association, the taxpayers’ accounting method “does not, for income tax purposes, clearly reflect income” and affirmed the judgment for the Commissioner, 296 F. 2d 721. We brought the case back once again to consider whether the lower court misapprehended the scope of American Automobile Association. 370 U. S. 902.
Taxpayers, husband and wife, formed a partnership to operate ballroom dancing studios (collectively referred to as “studio”) pursuant to Arthur Murray, Inc., franchise agreements. Dancing lessons were offered under either of two basic contracts. The cash plan contract required the student to pay the entire down payment in cash at the time the contract was executed with the balance due in installments thereafter. The deferred payment contract required only a portion of the down payment to be paid in cash. The remainder of the down payment was due in stated installments and the balance of the contract price was to be paid as designated in a negotiable note signed at the time the contract was executed.
Both types of contracts provided that (1) the student should pay tuition for lessons in a certain amount, (2) the student should not be relieved of his obligation to pay the tuition, (3) no refunds would be made, and (4) the contract was noncancelable. The contracts prescribed a specific number of lesson hours ranging from five to 1,200 hours and some contracts provided lifetime courses entitling the student additionally to two hours of lessons per month plus two parties a year for life. Although the contracts designated the period during which the lessons had to be taken, there was no schedule of specific dates, which were arranged from time to time as lessons were given.
Cash payments received directly from students and amounts received when the negotiable notes were discounted at the bank or fully paid were deposited in the studio’s general bank account without segregation from its other funds. The franchise agreements required the studio to pay to Arthur Murray, Inc., on a weekly basis, 10% of these cash receipts as royalty and 5% of the receipts in escrow, the latter to continue until a $20,000 indemnity fund was accumulated. Similarly, sales commissions for lessons sold were paid at the time the sales receipts were deposited in the studio’s general bank account.
The studio, since its inception in 1946, has kept its books and reported income for tax purposes on an accrual system of accounting. In addition to the books, individual student record cards were maintained showing the number of hours taught and the number still remaining under the contract. The system, in substance, operated as follows. When a contract was entered into, a “deferred income” account was credited for the total contract price. At the close of each fiscal period, the student record cards were analyzed and the total number of taught hours was multiplied by the designated rate per hour of each contract. The resulting sum was deducted from the deferred income account and reported as earned income on the financial statements and the income tax return. In addition, if there had been no activity in a contract for over a year, or if a course were reduced in amount, an entry would be made canceling the untaught portion of the contract, removing that amount from the deferred income account, and recognizing gain to the extent that the deferred income exceeded the balance due on the contract, i. e., the amounts received in advance. The amounts representing lessons taught and the gains from cancellations constituted the chief sources of the partnership’s gross income. The balance of the deferred income account would be carried forward into the next fiscal year to be increased or decreased in accordance with the number of new contracts, lessons taught and cancellations recognized.
Deductions were also reported on the accrual basis except that the royalty payments and the sales commissions were deducted when paid irrespective of the period in which the related receipts were taken into income. Three certified public accountants testified that in their opinion the accounting system employed truly reflected net income in accordance with commercial accrual accounting standards.
The Commissioner included in gross income for the years in question not only advance payments received in
5 The following schedule reflects ordinary net income on the studio’s books and returns: cash but the full face amounts of notes and contracts executed during the respective years. The Tax Court and the Court of Appeals upheld the Commissioner, but the United States in this Court has retreated somewhat and does not now claim the includibility in gross income of future payments which were not evidenced by a note and which were neither due by the terms of the contract nor matured by performance of the related services. The question remaining for decision, then, is this: Was it proper for the Commissioner, exercising his discretion under § 41, 1939 Code, and § 446 (b), 1954 Code, to reject the studio’s accounting system as not clearly reflecting income and to include as income in a particular year advance payments by way of cash, negotiable notes and contract installments falling due but remaining unpaid during that year? We hold that it was since we believe the problem is squarely controlled by American Automobile Association, 367 IT. S. 687.
Gross income:
1952 1953 1954
Contract amounts transferred to earned income.. $143,949.63 $243,277.46 $325,266.97
Gains from cancellation... 26,861.40 19,483.36 28,448.61
Other income. 4,041.21 11,426.23 16,987.31
Total. 174,852.24 274,187.05 370,702.89
Deductions. 137,267.91 223,390.69 301,609.76
Ordinary net income 37,584.33 50,796.36 69,093.13
The Court there had occasion to consider the entire legislative background of the treatment of prepaid income. The retroactive repeal of § 452 of the 1954 Code, “the only law incontestably permitting the practice upon which [the taxpayer] depends,” was regarded as reinstating long-standing administrative and lower court rulings that accounting systems deferring prepaid income could be rejected by the Commissioner.
“[T]he fact is that § 452 for the first time specifically declared petitioner’s system of accounting to be acceptable for income tax purposes, and overruled the long-standing position of the Commissioner and courts to the contrary. And the repeal of the section the following year, upon insistence by the Treasury that the proposed endorsement of such tax accounting would have a disastrous impact on the Government’s revenue, was just as clearly a mandate from the Congress that petitioner’s system was not acceptable for tax purposes.” 367 U. S., at 695.
Confirming that view was the step-by-step approach of Congress in granting the deferral privilege to only limited groups of taxpayers while exploring more deeply the ramifications of the entire problem.
Plainly, the considerations expressed in American Automobile Association are apposite here. We need only add here that since the American Automobile Association decision, a specific provision extending the deferral practice to certain membership corporations was enacted, § 456,1954 Code, added by § 1, Act of July 26, 1961, 75 Stat. 222, continuing, at least so far, the congressional policy of treating this problem by precise provisions of narrow applicability. Consequently, as in the American Automobile Association case, we invoke the “long-established policy of the Court in deferring, where possible, to congressional procedures in the tax field,” and, as in that case, we cannot say that the Commissioner’s rejection of the studio’s deferral system was unsound.
The American Automobile Association case rested upon an additional ground which is also controlling here. Relying upon Automobile Club of Michigan v. Commissioner, 353 U. S. 180, the Court rejected the taxpayer’s system as artificial since the advance payments related to services which were to be performed only upon customers’ demands without relation to fixed dates in the future. The system employed here suffers from that very same vice, for the studio sought to defer its cash receipts on the basis of contracts which did not provide for lessons on fixed dates after the taxable year, but left such dates to be arranged from, time to time by the instructor and his student. Under the contracts, the student could arrange for some or all of the additional lessons or could simply allow their rights under the contracts to lapse. But even though the student did not demand the remaining lessons, the contracts permitted the studio to insist upon payment in accordance with the obligations undertaken and to retain whatever prepayments were made without restriction as to use and without obligation of refund. At the end of each period, while the number of lessons taught had been meticulously reflected, the studio was uncertain whether none, some or all of the remaining lessons would be rendered. Clearly, services were rendered solely on demand in the fashion of the American Automobile Association and Automobile Club of Michigan cases.
Moreover, percentage royalties and sales commissions for lessons sold, which were paid as cash was received from students or from its note transactions with the bank, were deducted in the year paid even though the related items of income had been deferred, at least in part, to later periods. In view of all these circumstances, we hold the studio’s accrual system vulnerable under § 41 and § 446 (b) with respect to its deferral of prepaid income. Consequently, the Commissioner was fully justified in including payments in cash or by negotiable note in gross income for the year in which such payments were received. If these payments are includible in the year of receipt because their allocation to a later year does not clearly reflect income, the contract installments are likewise includible in gross income, as the United States now claims, in the year they become due and payable. For an accrual basis taxpayer “it is the right to receive and not the actual receipt that determines the inclusion of the amount in gross income,” Spring City Co. v. Commissioner, 292 U. S. 182, 184; Commissioner v. Hansen, 360 U. S. 446, and here the right to receive these installments had become fixed at least at the time they were due and payable.
We affirm the Court of Appeals insofar as that court held includible the amounts representing cash receipts, notes received and contract installments due and payable. Because of the Commissioner’s concession, we reverse that part of the judgment which included amounts for which services had not yet been performed and which were not due and payable during the respective periods and we remand the case with directions to return the case to the Tax Court for a redetermination of the proper income tax deficiencies now due in light of this opinion.
It is so ordered.
The controversy turns upon the accounting method employed by a partnership in which the taxpayers were equal partners. Since a partnership is not a taxable entity, the partners being liable in their individual capacities for their distributive share of partnership income, § 181, Int. Rev. Code of 1939; § 701, Int. Rev. Code of 1954, the proper statement of the partnership’s income affects only the tax liabilities of the partners individually. However, as there is no other dispute in the case, for convenience the discussion will center upon the partnership’s accounting method without further mention of its effect upon the respective tax liabilities of the partners.
Although the contracts stated they were noncancelable, the studio frequently rewrote contracts reducing the number of lessons for a smaller sum of money. Also, despite the fact that the contracts provided that no refunds would be made, and despite the fact that the studio discouraged refunds, occasionally a refund would be made on a canceled contract.
Notes taken from the students were ordinarily transferred, with full recourse, to a local bank which would deduct the interest charges and credit the studio with approximately 50% of the face amount. The remaining 50% was held in a reserve account, unavailable to the studio, until the note was fully paid, at which time the reserved amount was transferred to the studio’s general bank account.
Though the studio is not a taxable entity, it is still required to prepare and file an information return showing, inter alia, items of gross income and allowable deductions. § 187, 1939 Code; § 6031, 1954 Code.
“Upon reconsideration, however, we concede the error of accruing future payments which are neither due as a matter of contract, nor matured by performance of the related services. Indeed, the Studio’s right to collect the installment on its due date depends on its continuing ability and willingness to perform. Until that time, its right to receive payment has not fully ripened.” Brief for the United States, p. 67.
“SEC. 41. GENERAL RULE.
“The net income shall be computed upon the basis of the taxpayer’s annual accounting period (fiscal year or calendar year, as the case may be) in accordance with the method of accounting regularly employed in keeping the books of such taxpayer; but if no such method of accounting has been so employed, or if the method employed does not clearly reflect the income, the computation shall be made in accordance with such method as in the opinion of the Commissioner does clearly reflect the income. If the taxpayer’s annual accounting period is other than a fiscal year as defined in section 48 or if the taxpayer has no annual accounting period or does not keep books, the net income shall be computed on the basis of the calendar year.”
“SEC. 446. GENERAL RULE FOR METHODS OF ACCOUNTING.
“(a) GeNeral Rule. — Taxable income shall be computed under the method of accounting on the basis of which the taxpayer regularly computes his income in keeping his books.
“(b) Exceptions. — If no method of accounting has been regularly used by the taxpayer, or if the method used does not clearly reflect income, the computation of taxable income shall be made under such method as, in the opinion of the Secretary or his delegate, does clearly reflect income.
“(c) Permissible Methods. — Subject to the provisions of subsections (a) and (b), a taxpayer may compute taxable income under any of the following methods of accounting—
“(1) the cash receipts and disbursements method;
“(2) an accrual method;
“(3) any other method permitted by this chapter; or
“(4) any combination of the foregoing methods permitted under regulations prescribed by the Secretary or his delegate.”
The treatment of “gains from cancellations” underlines this aspect of the case. These gains, representing amounts paid or promised in advance of lessons given, were recognized in those periods in which the taxpayers arbitrarily decided the contracts were to be deemed canceled. The studio made no attempt to report estimated cancellations in the year of receipt, choosing instead to defer these gains to periods bearing no economic relationship to the income recognized. Cf. Continental Tie & Lumber Co. v. United States, 286 U. S. 290.
Negotiable notes are regarded as the equivalent of cash receipts, to the extent of their fair market value, for the purposes of recognition of income. § 39.22 (a)-4, Treas. Reg. 118, 1939 Code; § 1.61-2 (d)(4), Treas. Reg., 1954 Code; Mertens, Federal Income Taxation (1961), § 11.07. See Pinellas Ice Co. v. Commissioner, 287 U. S. 462.
See note 3, supra. See also § 41, 1939 Code.

Question: What is the agency involved in the administrative action?

Choices:
Army and Air Force Exchange Service
Atomic Energy Commission
Secretary or administrative unit or personnel of the U.S. Air Force
Department or Secretary of Agriculture
Alien Property Custodian
Secretary or administrative unit or personnel of the U.S. Army
Board of Immigration Appeals
Bureau of Indian Affairs
Bureau of Prisons
Bonneville Power Administration
Benefits Review Board
Civil Aeronautics Board
Bureau of the Census
Central Intelligence Agency
Commodity Futures Trading Commission
Department or Secretary of Commerce
Comptroller of Currency
Consumer Product Safety Commission
Civil Rights Commission
Civil Service Commission, U.S.
Customs Service or Commissioner or Collector of Customs
Defense Base Closure and REalignment Commission
Drug Enforcement Agency
Department or Secretary of Defense (and Department or Secretary of War)
Department or Secretary of Energy
Department or Secretary of the Interior
Department of Justice or Attorney General
Department or Secretary of State
Department or Secretary of Transportation
Department or Secretary of Education
U.S. Employees' Compensation Commission, or Commissioner
Equal Employment Opportunity Commission
Environmental Protection Agency or Administrator
Federal Aviation Agency or Administration
Federal Bureau of Investigation or Director
Federal Bureau of Prisons
Farm Credit Administration
Federal Communications Commission (including a predecessor, Federal Radio Commission)
Federal Credit Union Administration
Food and Drug Administration
Federal Deposit Insurance Corporation
Federal Energy Administration
Federal Election Commission
Federal Energy Regulatory Commission
Federal Housing Administration
Federal Home Loan Bank Board
Federal Labor Relations Authority
Federal Maritime Board
Federal Maritime Commission
Farmers Home Administration
Federal Parole Board
Federal Power Commission
Federal Railroad Administration
Federal Reserve Board of Governors
Federal Reserve System
Federal Savings and Loan Insurance Corporation
Federal Trade Commission
Federal Works Administration, or Administrator
General Accounting Office
Comptroller General
General Services Administration
Department or Secretary of Health, Education and Welfare
Department or Secretary of Health and Human Services
Department or Secretary of Housing and Urban Development
Administrative agency established under an interstate compact (except for the MTC)
Interstate Commerce Commission
Indian Claims Commission
Immigration and Naturalization Service, or Director of, or District Director of, or Immigration and Naturalization Enforcement
Internal Revenue Service, Collector, Commissioner, or District Director of
Information Security Oversight Office
Department or Secretary of Labor
Loyalty Review Board
Legal Services Corporation
Merit Systems Protection Board
Multistate Tax Commission
National Aeronautics and Space Administration
Secretary or administrative unit or personnel of the U.S. Navy
National Credit Union Administration
National Endowment for the Arts
National Enforcement Commission
National Highway Traffic Safety Administration
National Labor Relations Board, or regional office or officer
National Mediation Board
National Railroad Adjustment Board
Nuclear Regulatory Commission
National Security Agency
Office of Economic Opportunity
Office of Management and Budget
Office of Price Administration, or Price Administrator
Office of Personnel Management
Occupational Safety and Health Administration
Occupational Safety and Health Review Commission
Office of Workers' Compensation Programs
Patent Office, or Commissioner of, or Board of Appeals of
Pay Board (established under the Economic Stabilization Act of 1970)
Pension Benefit Guaranty Corporation
U.S. Public Health Service
Postal Rate Commission
Provider Reimbursement Review Board
Renegotiation Board
Railroad Adjustment Board
Railroad Retirement Board
Subversive Activities Control Board
Small Business Administration
Securities and Exchange Commission
Social Security Administration or Commissioner
Selective Service System
Department or Secretary of the Treasury
Tennessee Valley Authority
United States Forest Service
United States Parole Commission
Postal Service and Post Office, or Postmaster General, or Postmaster
United States Sentencing Commission
Veterans' Administration or Board of Veterans' Appeals
War Production Board
Wage Stabilization Board
State Agency
Unidentifiable
Office of Thrift Supervision
Department of Homeland Security
Board of General Appraisers
Board of Tax Appeals
General Land Office or Commissioners
NO Admin Action
Processing Tax Board of Review

Answer: 68