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stay the seizure and sale of the property (in satisfaction of the
tax lien) during the pendency of the contest. The Court held
that such payment did not satisfy the all events test so long as
the contest was still pending. Id. at 391-392.
The result in United States v. Consol. Edison Co., supra,
was overruled (retroactively to the effective date of the 1954
Code) by section 223 of the Revenue Act of 1964, Pub. L. 88-272,
78 Stat. 19, 76, which added section 461(f), which permits a
deduction for contested items in the year of payment, even though
the contest is not resolved until a later year. S. Rept. 830,
88th Cong., 2d Sess. (1964), 1964-1 C.B. (Part 2) 505, is the
report of the Committee on Finance that accompanied H.R. 8363,
88th Cong., 1st Sess. (1963), which, when enacted, became the
Revenue Act of 1964. The report explains the general reasons for
section 461(f) (which originated in the Senate) as follows:
Although your committee does not question the legal
doctrine laid down by the Supreme Court in the
Consolidated Edison case, it believes that it is
unfortunate to deny taxpayers a deduction with respect
to an item where the payment has actually been made,
even though the liability is still being contested
either as to amount or as to the item itself. * * *
S. Rept. 830, 88th Cong., 2d Sess. (1964), 1964-1 C.B. (Part 2)
505, 604. (Emphasis added.)
Thus, under well-established principles of tax accrual laid
down by the Supreme Court, it is clear that, for income tax
purposes, the all events test is not satisfied with respect to a
contested tax liability, and the contested tax liability may not
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