- 21 - receivable outstanding at that time. Income is increased to reflect any decrease in the reserve balance or decreased to reflect any increase in that balance. Notice 88-51, 1988-1 C.B. at 536. Accordingly, the periodic system of the nonaccrual- experience method of accounting is somewhat similar to a reserve method. Id. The periodic system requires the taxpayer to charge wholly or partially worthless accounts receivable directly to bad debt expense, ignoring the Uncollectible Amounts pertaining to those accounts receivable. Similarly, the taxpayer must disregard the Uncollectible Amounts of accounts receivable when it accounts for the collection of those receivables. Id. The 6-year moving average formula is used to estimate the total amount of all eligible accounts receivable outstanding at yearend that the taxpayer estimates it will not collect, including accounts receivable outstanding at the end of prior taxable years. Id. Is Section 448(d)(5) Ambiguous? Petitioners contend that the Amended Regulations are invalid because they are an unreasonable interpretation of an unambiguous statutory provision. In response, respondent contends that the statute is ambiguous in that it does not specify how "experience" is to be determined. Respondent contends further that the Amended Regulations are a valid interpretation of the statute. In construing section 448(d)(5) our task is to give effect to the intent of Congress. We begin with the statutory language,Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
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