Grady Whitlock Leasing Corporation - Page 5

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          deducted, regardless of whether they would otherwise be                     
          deductible as a business expense.  Carbine v. Commissioner, 83              
          T.C. 356, 367-368 (1984) (and cases cited thereat), affd. 777               
          F.2d 662 (11th Cir. 1985).  The fact that the insurance was                 
          required in connection with the financing of petitioner's                   
          business does not warrant a different conclusion.  Rodney v.                
          Commissioner, 53 T.C. 287, 318-319 (1969).   We sustain                     
          respondent on this issue.                                                   
               Accrued Taxes                                                          
               Petitioner used the cash receipts and disbursements method             
          to report the income from its long-term rental of automobiles but           
          deducted tax expenses related to that rental activity on the                
          accrual method.  The tax payments in question were not made until           
          the year following the taxable year to which they would relate              
          under an accrual accounting system.  Under section 446(c), a                
          taxpayer may use the cash receipts and disbursements method, the            
          accrual method, any other method permitted by the statute, or               
          "any combination of the foregoing methods permitted under                   
          regulations prescribed by the Secretary."  Sec. 446(c)(4)                   
          (emphasis added).                                                           
               Under section 1.446-1(c)(1)(i), Income Tax Regs., for                  
          taxpayers using the cash receipts and disbursements method of               
               Expenditures are to be deducted for the taxable year in                
               which actually made. * * *                                             

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