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calculate the Uncollectible Amount pursuant to the temporary
regulations. Id.
The Separate Receivable System of the Nonaccrual-Experience
Method
The so-called separate receivable system provided in the
temporary regulations applies the nonaccrual-experience method to
each account receivable which is eligible for that method. Sec.
1.448-2T(e)(3), Temporary Income Tax Regs., 52 Fed. Reg. 22775
(June 16, 1987). For any eligible receivable, the taxpayer
includes in gross income only the amount of that receivable that
is recognized as gross income minus the Uncollectible Amount.
The Uncollectible Amount of any receivable is the amount of the
receivable outstanding at the close of the taxable year
multiplied by a percentage. The Amended Formula provides for the
determination of the percentage by dividing (a) total bad debts
(adjusted for recoveries) sustained during the current and 5
preceding taxable years (or a shorter period with the approval of
the Commissioner) by (b) the sum of the accounts receivable
earned throughout that same 6-year (or shorter) period.
Accordingly, the Amended Formula provides for the determination
of the denominator of the fraction on the basis of total sales
resulting in accounts receivable throughout the applicable
period. Sec. 1.448-2T(e)(2)(i), Temporary Income Tax Regs., 53
Fed. Reg. 12513-12514 (Apr. 15, 1988). A taxpayer which has been
in existence for less than 6 years is to use its experience for
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