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Philip C. Cook, Terence J. Greene, Timothy J. Peaden, and
Ben E. Muraskin, for petitioner.
James F. Kearney and Joyce C. Albro, for respondent.
PARKER, Judge: Respondent determined deficiencies in
petitioner's Federal income tax as follows:
Tax Year Ended Deficiency
December 31, 1972 $1,299
December 31, 1976 112,652
December 31, 1978 379,041
December 31, 1980 1,694,423
December 31, 1981 961,212
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years before
the Court, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
The issues for decision are: (1) Whether annual credit card
fees received by petitioner in the taxable years 1980 and 1981
constitute payments for services rendered or made available to
its cardholders or payments for extension of credit in the nature
of additional interest or loan commitment fees; and (2) if the
annual fees represent payments for services, whether petitioner
is entitled under Rev. Proc. 71-21, 1971-2 C.B. 549, to defer
income from the annual fees received in one taxable year for
services to be performed by the end of the next taxable year; or,
stated another way, whether respondent, in denying petitioner the
benefits of Rev. Proc. 71-21, abused her discretion in
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