Flamingo Resort, Inc. v. United States
United States Court of Appeals for the Ninth Circuit
664 F.2d 1387 (1982)
Flamingo Resort (plaintiff), a legal Nevada casino, extended credit for roughly 60 percent of its gambling business; although Nevada courts would not enforce gambling debts, Flamingo actually collected as much as 94 percent of the credit it extended. Using the accrual method of accounting, Flamingo did not include uncollected 1967 credit as taxable income, reasoning its right to receive payment was legally unenforceable. The Commissioner assessed a tax deficiency on that uncollected credit, and the district court granted summary judgment for the government.
Whether, under the accrual method of accounting, a federal taxpayer must include receipts as gross income in the year he reasonably expects to collect them.