Significance
This case demonstrates a court determining whether an accrual method taxpayer may deduct liabilities that may or may not be paid in the taxable year. The court applied the test found in Treas. Reg. ยง 1.461-1(a)(2)(i) to determine that the casino's liabilities were in fact fixed on the date when the minimum number of club points were acquired. The fact that certain club members may choose not to redeem their points does not mean that they did not have an enforceable right against the casino. The court also pointed out that this decision would not lead to the casino escaping tax liability, as the casino would recapture as income the liabilities that were not actually discharged. The decision helps accrual method taxpayers understand when a contingent future liabilities become deductible expenses, allowing them to both file more accurate returns and better anticipate the tax consequences of their actions.
Read more about this topic: Gold Coast Hotel & Casino V. United States
Famous quotes containing the word significance:
“Of what significance the light of day, if it is not the reflection of an inward dawn?—to what purpose is the veil of night withdrawn, if the morning reveals nothing to the soul? It is merely garish and glaring.”
—Henry David Thoreau (1817–1862)
“For a parent, it’s hard to recognize the significance of your work when you’re immersed in the mundane details. Few of us, as we run the bath water or spread the peanut butter on the bread, proclaim proudly, “I’m making my contribution to the future of the planet.” But with the exception of global hunger, few jobs in the world of paychecks and promotions compare in significance to the job of parent.”
—Joyce Maynard (20th century)
“I am not afraid that I shall exaggerate the value and significance of life, but that I shall not be up to the occasion which it is.”
—Henry David Thoreau (1817–1862)