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events test, as modified by the economic performance test, for
the deduction at issue.
Whether a business expense has been "incurred" so as to
entitle an accrual basis taxpayer to deduct it under section
162(a) has long been governed by the "all events" test. United
States v. General Dynamics Corp., 481 U.S. 239, 242 (1987);
United States v. Hughes Properties, Inc., 476 U.S. 593, 600
(1986); sec. 1.461-1(a)(2), Income Tax Regs. In 1984, Congress
added to the Internal Revenue Code a new section 461(h) that
provides that in certain circumstances the all events test is not
met until "economic performance" occurs. United States v.
General Dynamics Corp., supra at 243 n.3; Halle v. Commissioner,
T.C. Memo. 1996-116; Spitzer Columbus, Inc. v. Commissioner,
T.C. Memo. 1995-397; sec. 1.461-4, Income Tax Regs. Here
economic performance occurred as AA&H provided to petitioner the
services covered by petitioner's obligation. Sec.
461(h)(2)(A)(i); sec. 1.461-4(d)(2), Income Tax Regs.2 Although
2Petitioner, although having listed the deduction as a
commission expense deduction on its income tax return, claims on
brief that the disputed deduction was of interest on what it owed
to AA&H. If the disputed amount is interest, then economic
performance occurred as the interest cost economically accrued.
Sec. 1.461-4(e), Income Tax Regs. However, petitioner adduces as
evidence for the assertion that the disputed amount is interest
only a credit memo of petitioner allowing a commission credit to
AA&H for the Turkey 25 Contract of $1,176,691.86. Petitioner has
not shown how the interest economically accrued, nor how, to the
extent that interest did accrue, it is not included in as much of
the total deduction as respondent has allowed. One of
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