In Touch Properties, LLC, David England, Tax Matters Partner - Page 11




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          (1) a liability must be binding and enforceable, (2) the                    
          liability must not be contingent on a future event, (3) the                 
          liability must be certain as to amount, and (4) the debtor must             
          have a reasonable belief that the liability will be paid.  United           
          Control Corp. v. Commissioner, 38 T.C. 957, 967 (1962).  In                 
          addition, section 461(h)(1) provides that in determining whether            
          an amount has been incurred with respect to any item during a               
          taxable year, “the all events test shall not be treated as met              
          any earlier than when economic performance with respect to such             
          item occurs.”  See also Restore, Inc. v. Commissioner, T.C. Memo.           
          1997-571 n.5, affd. without published opinion 174 F.3d 203 (11th            
          Cir. 1999).                                                                 
               Respondent argues that the consulting fees deducted by In              
          Touch as business expenses and/or included as startup                       
          expenditures in calculating its amortization deduction were not             
          properly accruable because a contingency existed as to their                
          payment.  In Putoma Corp. v. Commissioner, 66 T.C. 652, 659-663             
          (1976), affd. 601 F.2d 734 (5th Cir. 1979), a corporation’s                 
          obligation to pay compensation to its shareholder-employees was             
          not properly accruable because payment of the salaries depended             
          upon the future profits of the company.  The obligation to pay              
          salaries was not fixed since payment was contingent on the                  
          availability of funds.  Id. at 663.                                         






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