It is the right to receive money which in accrual accounting justifies the accrual of money receivable and its return as accrued income. The all events test states that receipts are not reportable in income until substantially 'all the events' have occurred, both as to the cost and time of performance, which must occur in order to discharge the liability to perform which was given by [the taxpayer] in return for the receipt.
The Supreme Court said in Spring City Foundry Co. v. Commissioner, 292 U.S. 182 (p. 184): * * * Keeping accounts and making returns on the accrual basis, as distinguished from the cash basis, import that it is the right to receive and not the actual receipt that determines the inclusion of the amount in gross income. When the right to receive an amount becomes fixed, the right accrues. * * * See Warren Co., 46 B. T. A. 897; Air-Way Electric Appliance Corporation v. Guitteau, 123 Fed. (2d) 20; and Ohmer Register Co. v. Commissioner, 131 Fed. (2d) 682.
The all events test is used to determine when accrual occurs.
Where there is a contingency that may ...