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fund deferred compensation obligations. Thus, the circumstances
of petitioner’s payment to Mohney in 1991 provide no reason to
doubt that it was what it purported to be. We are satisfied that
the payment should not be recharacterized as a dividend.
Having determined that the payment is deductible, we turn to
the issue of when the deduction may be taken. Petitioner
proposes to spread the $274,980 deduction ratably over the
7 taxable years to which the payment applies. This would entail
a deduction in the amount of $43,568 for each taxable year
between TYE 8/31/85 and TYE 8/31/91.3 Petitioner is an accrual
basis taxpayer. Under the accrual method, a liability is taken
into account for the taxable year in which all events have
occurred that establish the fact of the liability, the amount can
be determined with reasonable accuracy and economic performance
has occurred. Sec. 1.446-1(c)(1)(ii)(B), Income Tax Regs.
Petitioner could not determine the amount payable to Mohney for
compensation until notified thereof by Newlands during TYE
3 The figure that petitioner proposes on brief as the amount
of the annual deduction is $39,280 ($274,980 � 7). Considering
the $30,000 payment made to Mohney in 1988, the more appropriate
calculation would appear to be as follows: $274,976 = 6x + (x -
$30,000); hence, x = $43,568.
Inasmuch as the first four of these taxable years are not
before the Court and the period of limitations for claiming a
refund with respect to these years appears to have expired, sec.
6511(a), presumably petitioner takes this position in reliance on
the availability of relief under the mitigation provisions of the
Code. See secs. 1311(a), 1312(4), 1313(a)(1), and 1314(b).
Resort to the mitigation provisions to reopen closed taxable
years will be neither necessary nor warranted.
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