Article: IRS attacks vacation pay deduction acceleration.

In Letter Ruling (TAM) 9443006, the IRS National Office ruled against a widely used method of accelerating deductions of vacation pay accrued at the end of a tax year but not received by employees until they take their vacations during the following year. This position will presumably be followed by IRS agents in the field, which will probably lead to many audit challenges to similar arrangements. The argument underlying this ruling is extremely weak, however. It is based on an out-of-context reading of the applicable Code provision's legislative history that is unlikely to persuade many courts and will need to be bolstered if the IRS is to prevail in litigation. ...

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