- 17 - it. Respondent's primary objection to petitioner's use of that revenue procedure is the argument that the annual credit card fees do not represent payments for services under the cardholder agreement, a factual issue we have resolved in petitioner's favor. Almost as an afterthought, respondent argues that petitioner's accounting method for these annual fees does not clearly reflect income, an argument based upon an insistence that Rev. Proc. 71-21 requires a matching of income and expense on an individual cardholder basis. Petitioner admittedly does not track the expenses for these services on an individual cardholder basis. Having then decided that the revenue procedure, as thus interpreted by respondent, does not apply to petitioner, respondent concludes there is thus no abuse of discretion in denying petitioner the use of Rev. Proc. 71-21. We think respondent's approach is inconsistent with the intended purpose and benefit of the revenue procedure, that petitioner's pro rata reporting of these fees over a 12-month period satisfies Rev. Proc. 71-21, and that respondent's denial of the benefits of the revenue procedure to petitioner amounts to an abuse of discretion. In 1970, respondent issued Rev. Proc. 70-21, 1970-2 C.B. 501, to implement an administrative decision, made by the Commissioner of Internal Revenue in the exercise of his discretion under section 446 of the Internal Revenue Code of 1954, to allow accrual method taxpayers in certain specified and limited circumstances to deferPage: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
Last modified: May 25, 2011