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from a strict application of an accrual method. Petitioner
argues that respondent cannot challenge its method of accounting
for yearend sales and services because it has used this method
consistently in prior years that were audited by respondent
without relevant change.
Turning first to the parties' dispute over the all events
test, a taxpayer recognizes income under an accrual method when
all events have occurred that fix the right to receive the
income, and the amount thereof can be determined with reasonable
accuracy. Secs. 1.446-1(c)(1)(ii), 1.451-1(a), Income Tax Regs.;
see also United States v. Anderson, 269 U.S. 422 (1926);
Hallmark Cards, Inc. v. Commissioner, 90 T.C. 26, 32 (1988).
It is the right to receive an item of income, rather than its
actual receipt, that controls when the item is includable in the
gross income of an accrual method taxpayer. When the right to
receive a set amount of income becomes fixed, the income
ordinarily accrues. Spring City Foundry Co. v. Commissioner,
292 U.S. 182, 184 (1934); Resale Mobile Homes, Inc. v.
Commissioner, 91 T.C. 1085, 1093 (1988), affd. 965 F.2d 818 (10th
Cir. 1992).
Petitioner claims that its right to receive income on a
yearend sale or service is not fixed for purposes of the all
events test until it sends the fully documented invoice to its
customer. It was not an abuse of discretion for respondent to
reach the opposite conclusion. By the end of each year in issue,
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