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Possession Is 100% of the Tax Law

The accrual of some disputed payments may garner a deduction. But a company has to have control of the deferred funds.

November 23, 2009

In a case dating back to a lawsuit filed in 2000, the Tax Court has ruled on the matter of accruing disputed payments involving barge-maker Trinity Industries, an accrual method taxpayer, and its customers J. Russell Flowers Inc. and Florida Marine Transporters Inc. (FMT). The case facts are as follows: in Trinity Industries and Subsidiaries v. Commissioner, 132 T.C. No. 2 (2009), Trinity Industries entered into a series of contracts to build barges for Flowers and FMT. Payment was due upon delivery of the flat-bottomed boats, and Trinity duly delivered the barges on various dates between September 1997 and March 2000. Read more...

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