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taxable year, there must be a contingency as to the fact of the
liability itself. See United States v. Hughes Properties, Inc.,
supra at 601-603 (payment not contingent where the fact of the
liability was fixed by State law); Mooney Aircraft, Inc. v.
United States, 420 F.2d 400, 406 (5th Cir. 1969). A contingency
related only to the timing of the required payment will not
prevent a taxpayer from satisfying the all events test. United
States v. Hughes Properties, supra at 604. Therefore, we must
decide whether the contingencies that had to be met in this case
concern whether petitioner would ever be liable to pay the
royalties and interest.
Petitioner argues that its obligation to pay the accrued
royalties was fixed and definite. Respondent cites two cases
which support the disallowance of accruals where the underlying
liability is contingent on the taxpayer's profitability or cash
reserves. Respondent cites Putoma Corp. v. Commissioner, 601
F.2d at 739, wherein two corporate accrual taxpayers were not
entitled to deductions for accrued bonuses where payment was
conditioned under the terms of the agreement on the "judgment of
the majority of the directors of the company, [that] the company
has sufficient cash reserve in order to pay the salary."
Respondent also cites Burlington-Rock Island R.R. v. United
States, 321 F.2d 817, 818 (1963), wherein deductions were
disallowed for interest accrued under an agreement conditionally
obligating the taxpayer to make interest payments "from time to
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