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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,
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