Final answer:
The exception to the economic performance test allows the deduction of year-end accruals if the all-events test is satisfied and the liability can be determined with reasonable accuracy.
Step-by-step explanation:
An exception to the economic performance test allows the deduction of year-end accruals if all-events test is satisfied. The all-events test requires that all events have occurred that establish the fact of liability and the amount of the liability can be determined with reasonable accuracy.
For example, if a company has incurred expenses in the current year but has not yet received the corresponding invoices, it can still deduct those expenses as long as it can determine the amount of the liability based on other evidence, such as contracts or purchase orders.
So, in summary, the exception to the economic performance test for deducting year-end accruals is when the all-events test is satisfied and the liability can be determined with reasonable accuracy.