Background
Accrual method taxpayers report income when earned and claim deductions when expenses are owed.
Accrual method taxpayers may claim deductions in the taxable year in which
- all the events have occurred that establish the liability,
- the amount of the liability can be determined with reasonable accuracy, and
- economic performance has occurred with respect to the liability. Gold Coast Hotel is an example of a court applying the “all events” and “reasonable accuracy” prongs to determine whether a contingent liability is a deductible business expense.
For a general comparison of accrual method to the cash method, the other major process used to determine when a taxpayer has income, see Cash Method v. Accrual Method.
Read more about this topic: Gold Coast Hotel & Casino V. United States
Famous quotes containing the word background:
“... every experience in life enriches one’s background and should teach valuable lessons.”
—Mary Barnett Gilson (1877–?)
“I had many problems in my conduct of the office being contrasted with President Kennedy’s conduct in the office, with my manner of dealing with things and his manner, with my accent and his accent, with my background and his background. He was a great public hero, and anything I did that someone didn’t approve of, they would always feel that President Kennedy wouldn’t have done that.”
—Lyndon Baines Johnson (1908–1973)
“In the true sense one’s native land, with its background of tradition, early impressions, reminiscences and other things dear to one, is not enough to make sensitive human beings feel at home.”
—Emma Goldman (1869–1940)