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various licenses, permits, and fees (hereinafter collectively
licenses) before its trucks may be legally operated in the
issuing jurisdictions. The licenses are then effective for
specified periods of time. In 1993, petitioner paid $4,308,460
for such licenses. None of these licenses had an effective
period in excess of 1 year, but the expiration date for some fell
within the 1994, rather than the 1993, taxable year.
Similarly, petitioner also purchased liability and property
insurance coverage which extended into future tax years. In
1993, petitioner paid premiums of $1,090,602 for policies
covering the 1-year period from July 1, 1993, to June 30, 1994.
For purposes of Federal income taxes, book accounting, and
financial reporting, petitioner generally employs the accrual
method and a 52/53 week fiscal year. Petitioner’s 1993 fiscal
year ended on January 1, 1994.1 In compiling its financial books
and records for 1993, petitioner expensed the amounts paid in
1993 for licenses and insurance ratably over the 1993 and 1994
years. The license costs were allocated $1,869,564 to 1993 and
$2,438,896 to 1994. The insurance premiums were likewise
1 The deficiency notice determined a deficiency for “Tax
Year Ended” December 31, 1993, and the parties accept this
approach. Consequently, we proceed upon the postulation that
petitioner reported on a calendar year basis.
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