- 15 - amount based on a particular procedure or on some other negotiated per-case or per diem basis. Thus, in most cases, the hospitals' itemized bills do not bear any particular relationship to the amounts that the hospitals actually will be paid for the services provided. See Hospital Corp. of America v. Commissioner, T.C. Memo. 1996-105, for a detailed description of the hospitals' billing practices and the insurers' payment policies. OPINION An accrual method taxpayer generally must include a taxable amount in income when all events have occurred that fix the right to receive the income and the amount can be determined with reasonable accuracy. Sec. 1.451-1(a), Income Tax Regs. Section 448(d)(5),9 however, provides that an accrual-method taxpayer is not required to accrue income earned by the taxpayer with respect to the performance of services which, based on experience, it will not collect (i.e., the Uncollectible Amount) and for which no interest is charged or no penalty is applied for overdue 9 Sec. 448(d)(5) provides as follows: (5) Special rule for services.--In the case of any person using an accrual method of accounting with respect to amounts to be received for the performance of services by such person, such person shall not be required to accrue any portion of such amounts which (on the basis of experience) will not be collected. This paragraph shall not apply to any amount if interest is required to be paid on such amount or there is any penalty for failure to timely pay such amount.Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
Last modified: May 25, 2011