- 34 -
As shown by the foregoing statement, the Secretary
reconsidered the Original Temporary Regulations and the
legislative history as a result of questions from taxpayers as to
the proper formula to use to calculate the Uncollectible Amount
which arose following release of the Original Temporary
Regulations. A review of H. Rept. 99-426, at 608 (1985), 1986-3
C.B. (Vol. 2) 1, 608, reveals that the multiplier delineated in
the Amended Formula is consistent with the multiplier described
in the committee report. Accordingly, we conclude that the
Secretary's formulation of the multiplier in the Amended Formula
is reasonable. Whether the Secretary's framing of the
multiplicand is reasonable, however, requires further analysis.
In both the Original Formula and the Amended Formula, the
multiplicand is described as the accounts receivable outstanding
at yearend. As we explained, however, see supra pp. 28-29, the
description of the multiplicand in the committee report is
inconsistent. There, the multiplicand is defined both as the
total amount billed and as the receivables outstanding at the
close of the taxable year.
Petitioners contend that the Amended Formula compares two
sets of incomparable data. They maintain that a comparison of
past bad debts for the current year and 5 preceding years to past
total charge transactions, which includes charge transactions
that are collected in the same year billed as well as amounts not
yet collected, can only predict bad debts in total current charge
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 NextLast modified: May 25, 2011