1.461-4(d)(1) through (6)
1.461-4(g)(1) through (7)
1.461-5 (a) through (c)
Garber Abbey B [Abbey.B.Garber@IRSCOUNSEL.TREAS.GOV]
Monday, February 04, 2013 11:30 PM
Here are a few regulations
Treas. Reg. sec. 1.461-1(a)(2)(i)
Reg. sec. 1.461-1(a)(2)(ii)
Reg. sec. 1.461-1(a)(3)
Reg. sec. 1.461-1(c)
We’ll work through these and more Thursday.
Initial assignments for February 7:
I.R.C. section 461
Look at Treas. Reg. Section 1.461-0 for now to get a handle on what we are doing. I will specify parts of regs 1.461-1, 1.461-2, 1.461-4, 1.461-5 to look at later
Hughes Properties, Inc., 476 U.S. 593 (1986)
Mooney Aircraft, 420 F.2d 400 (5th. Cir. 1969)
General Dynamics, 481 U.S. 239 (1987)
Gertzman chapter 4, pp. 64-133.
Abbey B. Garber
107 S.Ct. 1732
Supreme Court of the United States
UNITED STATES, Petitioner
GENERAL DYNAMICS CORP., et al.
Argued Jan. 13, 1987.Decided April 22, 1987.
Accrual basis taxpayer sued for income tax refund, alleging that it was entitled to deduct, as a business expense, an estimate of its obligation to pay for employee medical care during the final quarter of the taxable year. The Claims Court, Robert M.M. Seto, J., 6 Cl.Ct. 250, found for taxpayer and Government appealed. The Court of Appeals, 773 F.2d 1224, affirmed. After granting certiorari, the Supreme Court, Justice Marshall, held that under the “all events” test, accrual basis taxpayer which provided medical benefits to its employees could not deduct at close of taxable year an estimate of its obligation to pay for such medical care during the final quarter of the year, with regard to claims which had not yet been reported to taxpayer. Reversed.
Justice O'Connor filed a dissenting opinion in which Justices Blackmun and Stevens joined. West Headnotes (5)Expand West Headnotes
*239 Under the “all events” test, as embodied in Treasury Regulations, an accrual-basis taxpayer is entitled to deduct a business expense for the taxable year in which all events have occurred which determine the fact of the taxpayer's liability, and in which the amount of that liability can be determined with reasonable accuracy. In the year at issue, a consolidated federal income tax return was filed by General Dynamics Corporation and several of its wholly owned subsidiaries (hereafter respondent). Respondent is an accrual basis taxpayer whose fiscal year is the calendar year. Beginning **1734 in 1972, it became a self-insurer with regard to its employee medical care plan. To receive medical payment reimbursements, employees must submit claims forms to employee benefits personnel, who verify eligibility and forward worthy claims to the plan's administrators, whose claims processors review the claims and approve covered expenses for payment. To account for the delay between the provision of medical services and the payment of claims, respondent established reserve accounts reflecting its liability for medical care received, but still not paid for, as of December 31, 1972. On its amended 1972 tax return, respondent sought a refund based on its claimed deduction of its reserve as an accrued expense. The Internal Revenue Service disallowed the deduction, but the Claims Court sustained it, holding that “all events” which determined the fact of respondent's liability had taken place when its employees received covered services, and that the amount of liability could be determined with reasonable accuracy. The Court of Appeals affirmed. Held: Where the filing of claims is a condition precedent to liability, an accrual basis taxpayer providing medical benefits to its employees cannot deduct at the close of the taxable year an estimate of its obligation to pay for medical care obtained by employees or their qualified dependents during the final quarter of the year, claims for which have not been reported to the employer. Pp. 1735-1738. (a) The proposed...