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rule as follows: “That the liability may not subsequently be
discharged by payment does not necessarily prevent its
consideration as a liability for the years accrued. * * * The
existence of an absolute liability is necessary; absolute
certainty that it will be discharged by payment is not." See also
United States v. Hughes Properties, Inc., 476 U.S. 593, 606
(1986).
The cases upon which respondent places principal reliance
(United States v. General Dynamics Corp., 481 U.S. 239 (1987);
ABKCO Indus., Inc., v. Commissioner, 56 T.C. 1083 (1971), affd.
482 F.2d 150 (3d Cir. 1973); Field Enters., Inc. v. United States,
172 Ct. Cl. 77, 348 F.2d 485 (1965)) are inapposite. In each of
these cases the Court found that the taxpayer’s liability for the
payments in question (in General Dynamics Corp, claims for medical
benefits; in ABKCO Indus., royalties; and in Field Enters., Inc.,
"quality bonuses") was contingent upon the prior occurrence of a
particular event (a condition precedent). In this case, all of
the events that fixed the author’s right to royalties had occurred
by the end of the taxable year (i.e., the completed sales of
books). That a portion of these royalties was withheld and might
never be paid because of returns in a subsequent taxable year does
not negate petitioner’s right to accrue the royalty expense in the
year of sale.
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