Gold Coast Hotel & Casino v. United States
United States Court of Appeals for the Ninth Circuit
158 F.3d 484 (1998)
Gold Coast (plaintiff) ran a slot-club rewards program letting members accumulate points redeemable for prizes once they reached 1,200 points, with each point valued at a stipulated $0.0021; Gold Coast deducted the market value of unclaimed points for members who crossed that 1,200-point threshold in the current year, then reported the value as income if a year passed with no further point activity. The IRS Commissioner (defendant) proposed adjustments disallowing these deductions, and the district court granted Gold Coast summary judgment on its challenge to those adjustments; the government appealed.
Whether, under the accrual method of accounting, a federal taxpayer must deduct an expense in the year all events have occurred that establish the taxpayer's liability to pay, even if the liability might never actually be discharged through payment.