-11- (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.Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 NextLast modified: November 10, 2007