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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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