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into account only $6,000 as an expense for the taxable
year in which the services were rendered. [Sec. 1.461-
1(a)(2)(ii), Income Tax Regs.]
Thirdly, economic performance generally occurs in connection with
the provision of services or property as the services or property
is provided. Sec. 461(h)(2)(A); sec. 1.461-4(d)(2)(i), Income
Tax Regs. An exception to this rule, under which economic
performance is deemed to occur only when payment is made, applies
in specified circumstances where the liability to make payments
arises, inter alia, out of a breach of contract. Sec. 1.461-
4(g)(2), Income Tax Regs.
Here, the record lacks any specific information with regard
to the nature of the underlying dispute and settlement with Boss
Day Planners. Consequently, the Court is unable to ascertain
whether any, much less all, of the three requirements for accrual
have been satisfied. We are faced with a situation where
petitioners do not dispute that they contested at least a portion
of the charges attendant to the Boss Day Planners transaction in
1998, they have not established any particular amount as to which
they had agreed by the end of the taxable year, and they made no
payments during the taxable year. The Court cannot countenance a
deduction in these circumstances.
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