- 17 -
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.
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011