United States v. General Dynamics Corp.

Section 446(a) of the Internal Revenue Code of 1954 provides that taxable income “shall be computed under the method of accounting on the basis of which the taxpayer regularly computes his income in keeping his books.” The Code specifically recognizes the use of “an accrual method,” 26 U. S. C. § 446(c)(2), under which a taxpayer is permitted to deduct an expense in the year in which it is “incurred,” regardless of when it is actually paid. § 162(a). Under the “all events” test, long applied by this Court and the Internal Revenue Service, an expense may be accrued and deducted when all the…