- 18 -
last day of preceding tax year if paid by due date of payor’s
tax return, including extensions); former sec. 267(a)(2)
(repealed 1984) (payments made within 2-1/2 months after end of
the payor’s taxable year relate to that year). However, section
267(a)(2) requires a precise matching of the date of the
deduction and the date that the amount is includable in the
gross income of the recipient:
any deduction allowable under this chapter in respect
of such amount shall be allowable as of the day as of
which such amount is includible in the gross income of
the person to whom the payment is made (or, if later,
as of the day on which it would be so allowable but
for this paragraph). * * * [Sec. 267(a)(2) (flush
language); emphasis added.]
This language does not permit a payment made after the end of
the fiscal year but during the calendar year to relate back.
Petitioner chose to use a fiscal year. “Under present law * * *
[current section 267], an accrual payor is effectively placed on
the cash basis for all payments to related cash basis payees,
and the payor’s deduction therefore is pushed over to the next
year if payment is made the stroke after midnight of the last
day of the accrual year.” Bittker & Lokken, Federal Taxation of
Income, Estates & Gifts, par. 78.2.1, at 78-11 (2d ed. 2001).
Petitioner cannot deduct payments made after the end of its
fiscal year merely because they were made prior to the end of
the calendar year. Petitioner’s efforts to distinguish Kaw
Dehydrating Co. v. Commissioner, 74 T.C. 370 (1980), on factual
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011