Barnett Banks of Florida, Inc. and Subsidiaries - Page 1

                                   106 T.C. No. 4                                     

                               UNITED STATES TAX COURT                                

           BARNETT BANKS OF FLORIDA, INC. AND SUBSIDIARIES, Petitioner v.             
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 16295-93.               Filed February 29, 1996.            

               P, an accrual basis taxpayer, is in the banking business and           
          issues credit cards.  P charges its cardholders an annual                   
          membership fee that entitles the cardholder to, inter alia, use             
          of the card with participating merchants, free replacement of               
          lost or stolen cards, 24-hour access to P's customer service                
          staff, and withholding of payment of disputed charges.  P has the           
          right to cancel the credit card at any time, but, if the card is            
          cancelled, the annual fee is refunded ratably for the number of             
          months remaining in the 1-year period.                                      
               1.  Held, the annual membership fees constitute payments for           
          services rendered or made available to cardholders rather than              
          payments in the nature of additional interest or loan commitment            
               2.  Held, further, under Rev. Proc. 71-21, 1971-2 C.B. 549,            
          P may report the annual membership fees in income ratably over              
          the 12-month period after receipt.                                          

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