Page:United States Statutes at Large Volume 88 Part 2.djvu/794

 2110

26 USC 162.

26 USC 162

note.

PUBLIC LAW 93-625-JAN. 3, 1975

[88 STAT.

"(1) a reasonable addition to an account representing the taxpayer's liability for vacation pay earned by employees before the close of the taxable year and payable during the taxable year or within 12 months following the close of the taxable year; plus "(2) the amount (if any) of the reduction at the close of the taxable year in the suspense account provided in subsection (^) (2); Such liability for vacation pay earned before the close of the taxable year shall include amounts which, because of contingencies, would not (but for this section) be deductible under section 162(a) as an accrued expense. All payments with respect to vacation pay shall be charged to such account. "(b) OPENING BALANCE.—The opening balance of the account described in subsection (a)(1) for its first taxable year shall, under regulations pi-escribed by the Secretary or his delegate, be— "(1) in the case of a taxpayer who maintained a predecessor account for vacation pay under section 97 of the Technical Amendments Act of 1958, as amended, for his last taxable year ending before January 1, 1973, and who makes an election under this section for his first taxable year ending after December 31, 1972, the larger of— " (A) the balance in such predecessor account at the close of such last taxable year, or " (B) the amount determined as if the taxpayer had maintained an account described in subsection (a)(1) for such last taxable year, or "(2) in the case of any taxpayer not described in paragraph (1), an amount equal to the largest closing balance the taxpayer would have had for any of the taxpayer's 3 taxable years immediately preceding such first taxable year if the taxpayer had maintained such account throughout such 3 immediately preceding taxable years. "(c)

SUSPENSE ACCOUNT FOR DEFERRED DEDUCTION.— "(1) INITIAL SUSPENSE ACCOUNT.—The amount of

the suspense account at the beginning of the first taxable year for which the taxpayer maintains under this section an account (described in subsection (a)(1)) shall be the amount of the opening balance described in subsection (b) minus the amount, if any, allowed as deductions for prior taxable years for vacation pay accrued but not paid at the close of the taxable year preceding such first taxable year. "(2) ADJUSTMENTS IN SUSPENSE ACCOUNT.-—At the close of each taxable year the suspense account shall be— " (A) reduced by the excess, if any, of the amount in the suspense account at the beginning of the taxable year over the amount in the account described in subsection (a)(1) at the close of the taxable year (after making the additions and charges for such taxaole year provided in subsection (a)), or " (B) increased (but not to an amount greater than the initial balance of the suspense account) by the excess, if any

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