The Deduction of Future Liabilities by Accrual-Basis Taxpayers: Premature Accruals, the All Events Test, and Economic Performance

Abstract:     
Written during the Paleozoic era, this article considers the timing of deductions by accrual-basis taxpayers. The article considers timing problems under pre-1984 prior law, where the benefit of a deduction for a future obligation could provide grossly inflated tax benefits; the limitations of the all events test as the sole determinant of timing; and the effect of statutory changes made by the Tax Reform Act of 1984, which require that a deduction be deferred until "economic performance" has occurred.

Number of Pages in PDF File: 49

Keywords: Taxation

JEL Classification: K34

Accepted Paper Series