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Pension Plan Contribution
Respondent argues that ETCO is not entitled to a $22,000
deduction claimed in its fiscal year ending June 30, 1990, by
remittance of a check for an alleged payment of a pension plan
contribution. In general, a cash basis taxpayer may deduct
expenses only "for the taxable year in which paid." Sec. 1.461-
1(a)(1), Income Tax Regs. Checks do not represent final payment
relieving a debtor of liability, but rather constitute only
conditional payment which becomes absolute when the creditor
presents the check to the bank, which then honors it. Md. Code
Ann., Com. Law I sec. 3-310(b)(1) (Michie 1997); Weber v.
Commissioner, 70 T.C. 52, 57 (1978). For Federal tax purposes,
the subsequent payment of the check relates back to the date of
delivery so as to allow deductions even where checks are
presented and honored during later years. Weber v. Commissioner,
supra at 57; see Clark v. Commissioner, 253 F.2d 745, 748 (3d
Cir. 1958), affg. in part, revg. in part, and remanding T.C.
Memo. 1956-176; Commissioner v. Bradley, 56 F.2d 728 (6th Cir.
1932), affg. 19 B.T.A. 49 (1930); Estate of Spiegel v.
Commissioner, 12 T.C. 524 (1949). But where the checks were not
presented and honored in due course, this Court has held that no
payment ever occurred because the condition upon which the
conditional payment rested was never satisfied. Weber v.
Commissioner, supra at 57; Estate of Hubbell v. Commissioner, 10
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