Exxon Corporation and Affiliated Companies - Page 17




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          tax deficiencies were assessed by respondent (namely, in 1981,              
          for the interest relating to the 1972 and 1973 tax deficiencies;            
          in 1985, for the interest relating to the 1974, 1975, and 1976              
          tax deficiencies; and in 1989, for the interest relating to the             
          1977 and 1978 tax deficiencies).                                            
               In 1989 and 1990 in the petitions filed in these cases,                
          petitioners made the claim that the total statutory interest that           
          related to Exxon’s agreed income tax deficiencies for 1972                  
          through 1978 should be accrued not in and for the year the audits           
          for those years were concluded and in which the Form 870                    
          agreements were entered into or the year in which the assessments           
          occurred (namely, 1981, 1985, and 1989), but that the interest              
          should relate back to the years 1973 through 1989 and should                
          accrue ratably in each year to which the interest relates.                  

                                       OPINION                                        
               Under section 461(a), a deduction is to be allowed in the              
          proper taxable year under the method of accounting used in                  
          computing a taxpayer’s income.                                              
               Under the all-events test of the accrual method of                     
          accounting, a liability expense accrues in the year in which all            
          the events have occurred which establish the fact of liability              
          for the expense and in which the amount of the liability can be             
          determined with reasonable accuracy.  See United States v.                  







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