Chrysler Corporation, f.k.a. Chrysler Holding Corporation, as Successor by Merger to Chrysler Motors Corporation and Its Consolidated Subsidiaries - Page 12




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          of the all events test is satisfied if a statute in part works to           
          fix the liability.  We do not agree.  In both Hughes Properties             
          and General Dynamics the Supreme Court focused on the last event            
          that created the liability.  In Hughes Properties the event                 
          creating liability was the last play of the machine before the              
          end of the fiscal year.  Because the Nevada statute fixed the               
          amount of the irrevocable payout, that play crystalized or fixed            
          absolutely the taxpayer’s liability, thus satisfying the first              
          prong of the all events test.  In General Dynamics, the last                
          event that created the liability was the employee filing the                
          claim for reimbursement.                                                    
               We are unable to find sufficient differences between the               
          facts in General Dynamics and those of the instant case to                  
          justify departing from the Supreme Court’s analysis.  Here, as in           
          General Dynamics, the last event fixing liability does not occur            
          before the presenting of a claim, either a claim for warranty               
          service by the customer through one of petitioner’s dealers or a            
          claim for reimbursement made on petitioner by the dealer.                   
               The Supreme Court stated:                                              
               It is fundamental to the "all events" test that,                       
               although expenses may be deductible before they have                   
               become due and payable, liability must first be firmly                 
               established.   This is consistent with our prior                       
               holdings that a taxpayer may not deduct a liability                    
               that is contingent, see Lucas v. American Code Co., 280                
               U.S. 445, 452, (1930), or contested, see Security Flour                
               Mills Co. v. Commissioner of Internal Revenue, 321 U.S.                
               281, 284, (1944).   Nor may a taxpayer deduct an                       
               estimate of an anticipated expense, no matter how                      
               statistically certain, if it is based on events that                   




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