Two kinds of money arrive with the same word.
Clients say retainer for both. One kind is earned when it arrives, and it can be income that day. The other kind is an advance, and it stays owed back until the work is done. The file has to pick one, and the item is how it picks.
An item pointed at income recognizes the fee on the deposit date. An item pointed at the liability waits. Send the item. The income account can stay covered.
If you cannot tell which kind you meant, the safer landing is the liability until someone can point at the work.
A filed year makes the choice louder.
Publication 5602 tells examiners that a cash-basis attorney's retainer is generally taxable when received, while an advance can still sit in trust until it is earned. The cover says that guide is not an official position and cannot be cited as one. The revision date on the file is 11 January 2022.
Name the years already filed before any retainer moves. Moving a deposit in a year that is already filed is how the trust story and the return story split.
We will not move the deposit on a call and leave the year unnamed. The year is part of the answer.
What the partners take after the fee.
Once a fee is earned, the question becomes what the partners draw and what stays in the firm. That decision is not a bookkeeping plug. It is the month's real choice, and it belongs in the same conversation as the trust account.
Form 7203 on this page is about a shareholder's basis, which is a later report. It is not a reason to call an advance earned. Basis follows the income. It does not create it.
Nothing on this retainer page names an hour rate or a package price. The retainer item and the last month the totals agreed are enough to start.
If the engagement letter calls the money nonrefundable, bring the letter and the item side by side. The word in the letter and the account in the file have to be the same story. A letter that says one thing and an item that posts another is the hour, not a footnote.
Open the newest retainer tonight.
Open the newest retainer deposit. Read the item it used. If you would have to refund it tomorrow because the work has not started, the item should not say income.
Write that answer in one line and send it. Amounts can wait. The direction is the fact.
Firms that work under a state trust rule can read that rule on the state page. This page stays with the habit that is the same in every state.
Name the item.
The item name is enough for a first note.
You will be talking to the Steven Palmieri practice.