Thus, for a taxpayer to currently deduct employment taxes on accrued
vacation/bonus pay that is paid in the subsequent year, it must meet the all events test and economic performance must have occurred with respect to the liability.
RMC further argued that the sale of the note by its 100% shareholder to the unrelated third party converted the accrued
interest prior to 1994 into a new liability, thus permitting the taxpayer to accrue and deduct the entire amount in 1994.
Instead, we must determine whether the interest accrued
at a time when petitioners' liability was no longer secondary and indirect.
If each accrued
liability account had a single dedicated expense account (not used in connection with any other liability account), the book expense and tax deduction related to that liability could be easily determined.
Under FASB Statement 96, Accounting for Income Taxes, the excess of the accrued
expense over the deductible benefit payments would be a "temporary" difference.
Were the timing of the deduction to be based on current law, it is clear that the Maryland Gross Receipts would be deductible as accrued
in the current (income) year.
28 The accrued
paid leave must be used in accordance with the employer's policy governing its use.
The contingent debt is issued for cash; interest is accrued
using the Regs.
The Tax Court next determined the sale price and the amount, if any, of accrued
However, prior case law, in certain circumstances, has held that solvency is a determining factor in whether a taxpayer can deduct accrued
If the accrued
compensation payments are made in the year of death, the applicable amounts should be reported as Social Security wages (box 3) and Medicare wages (box 5) on the decedent's final W-2, so that proper credit for those earnings is received.
In performing the accounting, annual expense should be computed first; the accrued
liability reported in the balance sheet will then reflect the difference between the cumulative accrued
expense and the actual amounts that are paid or funded.