Flamingo Resort, Inc. (Flamingo) (plaintiff) was a legal gambling casino in Nevada. Approximately 60 percent of Flamingo’s gambling occurred through the extension of credit to customers. Although Nevada did not enforce gambling debts in its courts, Flamingo would collect as much as 94 percent of the credit that was extended to customers. Flamingo used the accrual method of accounting, meaning that all expenses or gains were recognized at the time the obligation to pay or right to receipt existed. Flamingo did not include the uncollected credit as income on its 1967 tax return. The commissioner of internal revenue (commissioner) issued a deficiency notice against Flamingo for the unpaid tax on the uncollected credit. Flamingo filed suit against the United States government (government) (defendant) in federal district court. The district court granted summary judgment for the government, and Flamingo appealed.