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(a) introduction — (1) in general Account for federal income tax purposes, in the taxable year in which (1) all the events have occurred that establish the fact of the liability, (2) the amount of the liability can be determined with reasonable accuracy, and (3) economic performance has occurred with respect to the liability (the “all events test”). Paragraph (b) of this section lists.
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All events have occurred which determine the fact of the liability (that is, the taxpayer’s obligation to pay the bonus is “fixed”). Under the cash receipts and disbursements method of accounting, amounts representing allowable deductions shall, as a general rule, be taken into account for the taxable year in which paid. For purposes of this title, in determining whether an amount has been incurred with respect to any item during any taxable year, the all events test shall not be treated as met any earlier than when economic performance with respect to such item occurs.
The service has released proposed regulations relating to the economic performance requirement for taxpayers using the accrual method of accounting
The statute's general rule is. (a) general rule — (1) taxpayer using cash receipts and disbursements method
