USFreightways Corporation - Page 1

                                   113 T.C. No. 23                                    

                               UNITED STATES TAX COURT                                

                           AND SUBSIDIARIES, Petitioner v.                            
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 459-98.                   Filed November 2, 1999.           

               P, an accrual method taxpayer, made expenditures during the            
          1993 taxable year for licenses and insurance which had an                   
          effective period extending into 1994.  For purposes of book                 
          accounting and financial reporting, P ratably allocated these               
          costs over the periods to which they related.  For tax accounting           
          purposes, however, P currently deducted all license and insurance           
          expenses in the year of payment.  Held: On the facts, P, as a               
          taxpayer utilizing the accrual method, is not entitled to                   
          currently deduct costs benefiting future tax periods in the year            
          of payment.  R’s determination of a deficiency is sustained.                

               Rex A. Guest and Melvin L. Katten, for petitioner.                     
               Joseph P. Grant and Robin L. Herrell, for respondent.                  

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