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legislative history that provides for such a result or otherwise
suggests that a taxpayer is guaranteed a tax accrual in every
taxable year.
One might be tempted to commiserate with petitioner about
what appears to be an anomalous result (i.e., no franchise tax
deduction is allowable for 1989). That result, however, is due
to the confluence and application of the California franchise tax
laws and section 461(d). From another perspective, however,
petitioner could be considered fortunate to have avoided the
proscription of section 461(d) with respect to its 1988 franchise
tax deduction as decided in Schwab I. It was that turn of events
that resulted in a break in the tax accounting pattern and caused
the result that no franchise tax deduction was available for
1989.
Section 461(d) may have been intended to avoid double
deductions of taxes due to post-1960 State legislation that
accelerated their accrual date. The articulated mechanism used
to effect that policy, however, prohibits a corporation from
“accruing taxes * * * earlier than it would [have] but for any
action of any taxing jurisdiction taken after December 31, 1960”.
That language unambiguously embraces the California franchise tax
for petitioner’s 1989 tax year (its second complete year) which
under pre-1972 California law would not accrue until January 1,
1990, and would be based on the 1989 “income year”. We find that
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