An accrual basis taxpayer deducts expenses when the all-events test and the economic performance tests are satisfied.  The all-events test requires that all events have occurred that determine the fact that a liability exists and the amount of the liability must be known with reasonable accuracy.  This last requirement generally requires that the payee of the expense be known in addition to the amount of the liability.

The economic performance test requires that economic performance with regard to the liability must have occurred.  This generally means that services or property related to the liability have either been received or used by the taxpayer.