New York Life Insurance v. United States, 724 F.3d 256

New York Life, a calendar-year accrual-basis mutual life insurer, deducted policyholder dividends on its federal returns for tax years 1990–1995 under 26 U.S.C. § 808(c).
Two disputed deductions: (1) "Annual Dividend for January Policies" — credited in December but paid on January anniversary; (2) "Minimum Dividend Liability" — company calculated, for each policy, the lesser of the Annual or a Termination Dividend and deducted that aggregate amount in December for payment in the following year.
IRS audited and disallowed both deductions, ruling the amounts were deductible only in the year of payment because the deductions did not satisfy the Treasury Regulation "all‑events" test for accrual-basis taxpayers (Treas. Reg. § 1.461‑1(a)(2)(i)).
New York Life paid the assessed tax, sued for a refund (~$99.66 million plus interest), and the District Court dismissed under Fed. R. Civ. P. 12(b)(6) for failure to plausibly allege that "all events" had fixed the liabilities.
The Second Circuit affirmed, holding that the deductions were contingent and that New York Life failed to allege facts establishing that the liabilities were fixed as of the taxable year in which the accruals were claimed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Annual Dividends credited in Dec. (for Jan. anniversaries) accrued in the Dec. taxable year	Crediting and premium payment in the taxable year fixed liability; the policyholder’s likely inaction is enough to establish liability	Liability not fixed until policy remains in force on the January anniversary; policyholder could surrender before anniversary so liability was contingent	Denied — liability not fixed by year-end; all‑events test not met because the final event (policy in force on anniversary) had not occurred
Whether the Minimum Dividend Liability (lesser of Annual or Termination Dividend) accrued in the prior taxable year	Comparing Annual and Termination amounts and board calculations fixed a minimum liability; customary practice created an obligation	No contractual, statutory, or otherwise binding obligation to pay a Termination Dividend on surrender; liability was voluntary/contingent	Denied — no preexisting obligation established as of year-end; all‑events test not met

United States v. Anderson, 269 U.S. 422 (1926) (articulated the all‑events principle: liability accrues when all events fixing liability have occurred)
United States v. Hughes Props., Inc., 476 U.S. 593 (1986) (upheld accrual where state law fixed an unavoidable liability)
United States v. General Dynamics Corp., 481 U.S. 239 (1987) (denied accrual where a claimant’s filing was the crucial event fixing employer liability)
Burnham v. Commissioner, 878 F.2d 86 (2d Cir. 1989) (distinguished: event fixing liability existed there; survival was not a discretionary third‑party choice)
National Life Ins. Co. v. Commissioner, 103 F.3d 5 (2d Cir. 1996) (permitted accrual where insurer guaranteed prorated monthly dividends, creating a fixed obligation)
Commissioner v. H.B. Ives Co., 297 F.2d 229 (2d Cir. 1961) (board resolution alone does not fix liability for accrual deduction)