Question

Under the all-events test, in addition to specifying that all events to establish the liability must have occurred, the test also provides that the business must be able to determine the amount of the liability with reasonable accuracy.1. True2. False

Answer 1

True

Explanation:

An All-Events test a test under U.S. federal income tax law that states all events fixing an accrual-method, taxpayer's right to receive income, or incur expense must occur before the taxpayer can report an item of income or expense. An all-events test is said to be met when :

(1) All events have occurred that fix the fact of liability; and

(2) The liability can be determined with reasonable accuracy.

Answer 2

TRUE

Step-by-step explanation:

It is true that under the all-events test, in addition to specifying that all events to establish the liability must have occurred, the test also provides that the business must be able to determine the amount of the liability with reasonable accuracy

Under Sec. 461(h), a three-prongall-events test is met when

(1) all events have occurred that establish the fact of the liability;

(2) the amount of the liability can be determined with reasonable accuracy; and

(3) economic performance has occurred.