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agreement. In that regard, petitioners and respondent stipulated
that National acknowledged by the end of taxable year 1999 that
it had an obligation to F&D under the indemnity agreement.
Following the October 18, 1999, letter, the remaining differences
focused mainly upon the aspects of payment, such as timing, an
aspect that will not prevent the items from satisfying the all-
events test. See United States v. Hughes Props., Inc., supra at
604. The fact that the litigation was not resolved does not,
ipso facto, indicate that National disputed whether it had an
obligation under the indemnity agreement. It should be noted
that the parties to this case stipulated that National recognized
its obligation to F&D under the indemnity agreement by the end of
1999. National and F&D’s continuing disagreement concerned
aspects of the terms of the obligation. However, the existence
of the liability was not contested and could be established with
reasonable certainty.
In this case, all of the events had occurred to establish a
liability: F&D and National entered into an indemnity agreement,
circumstances arose necessitating performance under the indemnity
agreement, and National was obligated to pay F&D under the
indemnity agreement. Accordingly, the $2,500,000 claimed
reduction to income was not a “contingent” liability, as
respondent contends. The fact of liability could be established
as of December 31, 1999.
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