- 33 -
Inc. v. Commissioner, 71 T.C. 465, 476 (1978); Lemery v.
Commissioner, 52 T.C. 367, 377-378 (1969), affd. per curiam
451 F.2d 173 (9th Cir. 1971); Gibson Prods. Co. v. United
States, 460 F. Supp. 1109, 1115 (N.D. Tex. 1978), affd. 637
F.2d 1041 (5th Cir. 1981); sec. 1.461-1(a)(2), Income Tax
Regs. Herein, respondent disputes whether Exxon’s attempted
accrual of estimated Prudhoe Bay DRR costs would satisfy
either prong of the all-events test.
The first prong of the all-events test looks only to
whether the taxpayer’s fact of liability for the costs in
question has been established. This test may be satisfied
even if it is not known when or to whom costs will be paid.
See United States v. Hughes Properties, Inc., supra at 604;
Valero Energy Corp. & Subs. v. Commissioner, 78 F.3d 909, 915
(5th Cir. 1996), affg. T.C. Memo. 1994-132. A liability can
be fixed even if there are procedural or ministerial steps
that still have to occur before payment. Accrual should be
deferred if the occurrence of those steps is sufficiently
uncertain that they render the taxpayer’s liability
contingent. See, e.g., Continental Tie & Lumber Co. v. United
States, 286 U.S. 290 (1932); United States v. Anderson, supra.
The mere speculative possibility that some future event
will release the taxpayer from its liability does not prevent
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