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Corp. v. Commissioner, T.C. Memo. 1961-184. The same principle
applies in the instant case.4
Petitioners argue that InTex's obligation to pay the
commission is fixed and enforceable, like a deferred obligation
to pay the purchase price of property, and therefore includable
in basis. In so arguing, petitioners seek to apply the rationale
of Commissioner v. Tufts, 461 U.S. 300 (1983), and its
predecessor, Crane v. Commissioner, 331 U.S. 1 (1947). We
disagree. The fact of the matter is that the rationale of Tufts
and Crane in the cash versus accrual context is sui generis as
the Supreme Court's opinion in Tufts clearly reveals. In our
judgment, it has no application to the issue before us.
In a similar vein, we reject petitioners' attempt to remove
a capital expenditure from the impact of section 461,
notwithstanding the fact that that section speaks in terms of a
"deduction". Whether the item is within the category of a
deduction or a capital expenditure, payment is a prerequisite for
its being taken into account by a cash basis taxpayer. Indeed,
we have specifically so held where commissions were involved.
4 Factors cited by petitioners, such as that the amount of
the commission was ascertainable and that the expense had been
"incurred", are not relevant to a cash basis entity such as
InTex. Even if InTex used the accrual method of accounting and
met all other requirements for accrual of the expense, sec. 267
would operate to delay a deduction at least until Mr. Haymond, as
a related taxpayer on the cash method of accounting, included the
commission in income.
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