- 29 -
payment, even though they continue to be contested. See G.C.M.
25298, 1947-2 C.B. 39, 44, which followed Chestnut Sec. Co. v.
United States, 104 Ct. Cl. 489, 62 F. Supp. 574 (1945).2 Under
those circumstances, the general accrual rule applicable to
contested taxes, contained in section 1.535-2(a)(1), Income Tax
Regs., could only have applied to unpaid taxes because its
extension to paid taxes would have been inconsistent with G.C.M.
25298. Since 1964, an extension of that provision to paid
contested taxes would be inconsistent with section 461(f), which,
in effect, codified and reinstated the Commissioner’s position in
G.C.M. 25298. Therefore, petitioner’s payment of the contested
taxes could serve only to accelerate a deduction to the year of
payment pursuant to section 461(f). There is no basis under
either the all events test or section 461(f) for the Court of
Appeals for the Fifth Circuit’s suggestion, J.H. Rutter Rex
Manufacturing Co. v. Commissioner, supra at 1297, that the
payment itself somehow justifies an accrual of such taxes in the
earlier year for which the taxpayer is subject to tax imposed by
section 531.
We are left, then, to determine whether the test of a
section 535(b)(1) tax accrual is the all events test.
2 Chestnut Sec. Co. v. United States, 104 Ct. Cl. 489, 62
F. Supp. 574 (1945), was effectively overruled by United States
v. Consol. Edison Co., 366 U.S. 380 (1961).
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011