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which proscribes the accrual of State tax attributable to post-
1960 State legislation that would accelerate the accrual of such
tax. Section 461(d)(1) provides:
In the case of a taxpayer whose taxable income is
computed under an accrual method of accounting, to the
extent that the time for accruing taxes is earlier than
it would be but for any action of any taxing
jurisdiction taken after December 31, 1960, then, under
regulations prescribed by the Secretary, such taxes
shall be treated as accruing at the time they would
have accrued but for such action by such taxing
jurisdiction.
Petitioner contends that section 461(d) was intended to
prevent a taxpayer from deducting two State tax liabilities in
any 1 Federal taxable year. Going a step further, petitioner
contends that it is entitled to an accelerated deduction for
State tax, so long as it does not become entitled to more than
one California franchise tax deduction for any Federal taxable
reporting year. Petitioner’s position, in great part, appears to
be sourced in the following legislative history that provides
some of the bases for enactment of section 461(d):
it is to be noted that the rule of law that a tax
liability is accruable on a certain date such as the
assessment or lien date has developed over a long
period of years through court decisions and is a basic
concept which the Internal Revenue Service has
recognized in numerous rulings. Several States in
recent years have changed this accrual date from
January 1 to [the preceding] December 31 in order to
provide an extra accrual date for State taxes. This
amendment [adding sec. 461(d)], which would be
effective for years after 1960 [the year of enactment]
and thus put the States and taxpayers on proper notice,
would change the law to provide for only one accrual
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