- 32 -
In contrast, the Amended Formula promulgated in section 1.448-
2T(e)(2)(i), Temporary Income Tax Regs., supra, provides for the
Uncollectible Amount to be calculated as follows:
Total bad debts with respect to accounts
Uncollectible Accounts receivable sustained during the current
amount of a = receivable x tax year and 5 preceding tax years less
receivable outstanding recoveries of bad debts during that period
at yearend sum of accounts receivable earned (i.e.,
total sales) for the same 6-year period
The substantive difference between the Original Formula and the
Amended Formula is the substitution in the denominator of the
multiplier of (1) the sum of accounts receivable earned (i.e.,
total sales resulting in accounts receivable) throughout the 6-
year moving average period for (2) the sum of the yearend
accounts receivable for each year during that 6-year period.
One theme recurring throughout petitioners' challenge to the
validity of the Amended Regulations is that the Amended Formula
is defective because it does not use the Black Motor formula to
calculate the Uncollectible Amount. Neither the statute nor its
legislative history, however, contains anything which leads us to
conclude that Congress intended such a result.
We are not persuaded by petitioners' argument that, inasmuch
as the Original Formula is premised on the Black Motor formula,
the Secretary must have initially read the legislative history in
the same manner as suggested by petitioners. Under the
circumstances of the instant case where the Secretary acted
quickly--within 10 months of promulgation of the Original
Temporary Regulations--to amend temporary regulations that he
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011