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accrual of the $65,000 professional fee. During the audit,
petitioner was represented by Coupounas. Coupounas stated that
the $65,000 was for his services and that he had never billed
petitioner and had not been paid for the services. He declined
to provide time sheets reflecting services performed for
petitioner. In August 1998, Olbres signed a check payable to
Coupounas for $65,000. At the direction of Coupounas, Olbres
dated the check December 31, 1998. The check was delivered to
Coupounas in August 1998 and was negotiated by him and cleared
petitioner’s bank account in August 1998. Before delivering the
check to Coupounas, Olbres did not receive from Coupounas any
invoice or other itemization of the services for which payment
was allegedly made.
OPINION
Petitioner argues that the professional fees were incurred
during the year in issue.
Under the accrual method of accounting, a liability is
incurred, and generally is taken into account for Federal income
tax purposes, in the taxable year in which all the events have
occurred that establish the fact of the liability, the amount of
the liability can be determined with reasonable accuracy, and
economic performance has occurred with respect to the liability.
Sec. 1.461-1(a)(2), Income Tax Regs.
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