§ 1.461-0. Table of contents.

§ 1.461-1 General rule for taxable year of deduction.

(a) General rule.

(1) Taxpayer using cash receipts and disbursements method.

(2) Taxpayer using an accrual method.

(3) Effect in current taxable year of improperly accounting for a liability in a prior taxable year.

(4) Deductions attributable to certain foreign income.

(b) Special rule in case of death.

(c) Accrual of real property taxes.

(1) In general.

(2) Special rules.

(3) When election may be made.

(4) Binding effect of election.

(5) Apportionment of taxes on real property between seller and purchaser.

(6) Examples.

(d) Limitation on acceleration of accrual of taxes.

(e) Dividends or interest paid by certain savings institutions on certain deposits or withdrawable accounts.

(1) Deduction not allowable.

(2) Computation of amounts not allowed as a deduction.

(3) When amounts allowable.

§ 1.461-2 Contested liabilities.

(a) General rule.

(1) Taxable year of deduction.

(2) Exception.

(3) Refunds includible in gross income.

(4) Examples.

(5) Liabilities described in paragraph (g) of § 1.461-4. [Reserved]

(b) Contest of asserted liability.

(1) Asserted liability.

(2) Definition of the term “contest.”

(3) Example.

(c) Transfer to provide for the satisfaction of an asserted liability.

(1) In general.

(2) Examples.

(d) Contest exists after transfer.

(e) Deduction otherwise allowed.

(1) In general.

(2) Example.

(f) Treatment of money or property transferred to an escrowee, trustee, or court and treatment of any income attributable thereto. [Reserved]

(g) Effective dates.

§ 1.461-3 Prepaid interest. [Reserved] § 1.461-4 Economic performance.

(a) Introduction.

(1) In general.

(2) Overview.

(b) Exceptions to the economic performance requirement.

(c) Definitions.

(1) Liability.

(2) Payment.

(d) Liabilities arising out of the provision of services, property, or the use of property.

(1) In general.

(2) Services or property provided to the taxpayer.

(3) Use of property provided to the taxpayer.

(4) Services or property provided by the taxpayer.

(5) Liabilities that are assumed in connection with the sale of a trade or business.

(6) Rules relating to the provision of services or property to a taxpayer.

(7) Examples.

(e) Interest.

(f) Timing of deductions from notional principal contracts.

(g) Certain liabilities for which payment is economic performance.

(1) In general.

(2) Liabilities arising under a workers compensation act or out of any tort, breach of contract, or violation of law.

(3) Rebates and refunds.

(4) Awards, prizes, and jackpots.

(5) Insurance, warranty, and service contracts.

(6) Taxes.

(7) Other liabilities.

(8) Examples.

(h) Liabilities arising under the Nuclear Waste Policy Act of 1982.

(i) [Reserved]

(j) Contingent liabilities. [Reserved]

(k) Special effective dates.

(1) In general.

(2) Long-term contracts.

(3) Payment liabilities.

(l) [Reserved]

(m) Change in method of accounting required by this section.

(1) In general.

(2) Change in method of accounting for long-term contracts and payment liabilities.

§ 1.461-5 Recurring item exception.

(a) In general.

(b) Requirements for use of the exception.

(1) General rule.

(2) Amended returns.

(3) Liabilities that are recurring in nature.

(4) Materiality requirement.

(5) Matching requirement.

(c) Types of liabilities not eligible for treatment under the recurring item exception.

(d) Time and manner of adopting the recurring item exception.

(1) In general.

(2) Change to the recurring item exception method for the first taxable year beginning after December 31, 1991.

(3) Retroactive change to the recurring item exception method.

(e) Examples.

§ 1.461-6 Economic performance when certain liabilities are assigned or are extinguished by the establishment of a fund.

(a) Qualified assignments of certain personal injury liabilities under section 130.

(b) Section 468B.

(c) Payments to other funds or persons that constitute economic performance. [Reserved]

(d) Effective dates.