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associated with that RISC/fleet loan that GMAC received from GM)
as income over the life of the RISC/fleet loan (rate support
discount income).
For taxable years prior to 1985, the GM group reported GM's
rate support deductions and GMAC's rate support discount income
as intercompany transactions. A consolidation adjustment was
made deferring GM's rate support deductions in the GM group's
consolidated income tax return until GMAC recognized the discount
income.
For 1985 and subsequent years, the GM group did not report
GM's rate support deductions and GMAC's rate support discount
income as intercompany transactions. GM continued to claim the
retail and fleet rate support payments as current deductions when
paid (or credited) to GMAC. No consolidation adjustment was made
deferring GM's rate support deductions in the GM group's
consolidated income tax return.
The GM group did not file, in 1985 or any other relevant
year, a Form 3115, Application for Change in Accounting Method,
with the Commissioner.
VIII. Claims for Refund
GM filed refund claims with the Internal Revenue Service
(IRS) for tax years prior to 1985 on the basis that the deferral
of GM's rate support deductions on the GM group's consolidated
return for those years was incorrect.
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