- 29 - taxpayer, and whose denominator is the total of such amounts billed within the same five year period. If the taxpayer has not been in existence for the prior five taxable years, the portion of such five year period which the taxpayer has been in existence is to be used. For example, assume that an accrual-basis taxpayer has $100,000 of receivables that have been created during the most recent five taxable years. Of the $100,000 of accounts receivable, $1,000 have been determined to be uncollectible. The amount, based on experience, which is not expected to be collected is equal to 1 percent ($1,000 divided by $100,000) of any receivable arising from the provision of services that are outstanding at close of the taxable year. [Emphasis added; fn. ref. omitted.] As the foregoing emphasized language reveals, one paragraph of the committee report specifies that the Uncollectible Amount is calculated by multiplying the total amount billed during the taxable year by the ratio of the sum of the amount of those billings determined uncollectible within the most recent 5 taxable years to the sum of the billings within that same 5-year period. In the example in the following paragraph, however, the formula is expressed somewhat differently; to wit, in the example, the Uncollectible Amount is calculated by multiplying the receivables outstanding at the close of the taxable year by the ratio of the amount of those billings determined uncollectible within the most recent 5 taxable years to the sum of the billings within that same 5-year period. In our view, the committee report merely suggests that Congress intended eligible taxpayers to employ a method to determine statistically thePage: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Next
Last modified: May 25, 2011