Rev. Rul. 70-560

During the taxable year 1968 a deficiency in the Federal income tax for the taxable year 1966 was asserted against a corporation that uses the accrual method of accounting for Federal income tax purposes. The deficiency was contested in the Tax Court of the United States. In the taxable year 1970 the court determined that the tax was due. The decision of the court was not appealed and the deficiency and the interest thereon were paid.

Held, the entire interest on the deficiency in Federal income tax for the year 1966 accrues in the taxable year 1970 when the liability for the deficiency was finally determined and is an allowable deduction under section 163 of the Internal Revenue Code of 1954 in the year 1970.

Held further, if the deficiency had not been contested and the deficiency had been agreed to when it was asserted in 1968 the interest on the deficiency should have been accrued and deducted in that year.

G.C.M. 9575, C.B. X-1, 381 (1931) is superseded, since the position set forth therein is restated under the current statute and regulations in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.