Barnett Banks of Florida, Inc. and Subsidiaries - Page 11

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          annual fees in their books ratably over 12 months.  When the                
          annual fee was assessed, the issuing banks established a credit             
          card receivable and made an offsetting credit entry to the                  
          deferred income account corresponding to the calendar month of              
          the assessment.  They then recognized the annual fees as income             
          ratably over the ensuing 12-month period.8                                  
               For financial accounting purposes and bank regulatory                  
          accounting purposes, for the year 1980 and all years thereafter,            
          petitioner ratably allocated its annual fees over 12 months.  For           
          Federal income tax purposes, for the taxable years 1980 through             
          1985, petitioner ratably allocated the annual fees over 12                  
          months.  Petitioner has maintained adequate books and records of            
          the annual fees so that the amount deferred on its Federal income           
          tax return for each of the taxable years 1980 and 1981 can be               
          verified from such books and records.                                       
               Respondent determined that the annual fees assessed in                 
          taxable years 1980 and 1981 should be included in income in the             
          year of receipt for Federal income tax purposes, and increased              
          petitioner's income by $2,962,829 and $1,010,872, for 1980 and              
          1981, respectively.  In addition, respondent adjusted                       
          petitioner's income for the taxable years 1976 through 1982 in              
          accordance with a Schedule of Agreed Adjustments executed by                
          petitioner on April 12, 1993.  Respondent allowed petitioner a              


          8  In Stipulation 16 the parties have set out the details of                
          this accounting system.                                                     



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