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income for its second year on its Federal income tax
return for the taxable year ended Dec. 31, 1988.
Held: Under the "all events" test, P must accrue
commission income for the purchase or sale of
securities on the trade date as opposed to the
settlement date.
Held, further: Under California law, P's
liability for franchise taxes based on its income
during its second year ended Dec. 31, 1988, was fixed
on that date. Sec. 461(d), I.R.C., which would act to
disallow the accrual of State taxes "to the extent that
the time for accruing taxes is earlier than it would be
but for any action of any taxing jurisdiction taken
after December 31, 1960" does not apply because under
California law as it existed prior to Dec. 31, 1960,
all events fixing P's liability for franchise tax based
on income earned during its second year would have
accrued on Dec. 31 of its second year.
Philip C. Cook, Terence J. Greene, Timothy J. Peaden,
Karen S. Sukin, Ben E. Muraskin, Michelle M. Henkel,
Glenn A. Smith, Michael R. Faber, Teresa A. Maloney, for
petitioner.
Usha Ravi, Steven A. Wilson, and Emily Kingston, for
respondent.
RUWE, Judge: Respondent determined deficiencies in
petitioner’s Federal income taxes for the taxable years ending
March 31, 1988, and December 31, 1988, in the amounts of
$16,136,176 and $12,146,497, respectively.
After concessions, the issues remaining for decision are:
(1) Whether petitioner must accrue brokerage commission income on
the date a trade is executed or on the settlement date; and (2)
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