- 39 -
Effective date
The provision of the conference agreement is effective
for taxable years beginning after December 31, 1986. * * *
Any adjustment required by section 481 as a result of such
change * * * [from the cash method to the accrual method of
accounting] generally shall be taken into account over a
period not to exceed four years. It is the intent of the
conferees that this apply to all changes resulting from the
provision, including any changes necessitated by the rule
that certain accrual taxpayers, including taxpayers
presently on the accrual method of accounting, need not
recognize income on amounts statistically determined not to
be collectible. [H. Conf. Rept. 99-841 (Vol. 2), supra at
II-288, 1986-3 C.B. (Vol. 4) at 288, emphasis added.]
In the Amended Formula, the multiplicand conforms to one of
two multiplicands described in the legislative history. See H.
Rept. 99-426, supra at 608, 1986-3 C.B. (Vol. 2) at 608. The
Amended Formula, furthermore, effectuates the purpose of the
statute. Accordingly, the Secretary's choice of multiplicand is
a permissible construction of section 448(d)(5). Consequently,
under the Chevron rule, we must defer to that construction.
Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., supra at
843; Peoples Fed. Sav. & Loan Association v. Commissioner, supra
at 299-300. For the foregoing reasons, we conclude that the
Amended Temporary Regulations are valid.
Is the Periodic System of the Nonaccrual-Experience Method
Valid?
The periodic system of the nonaccrual-experience method is
not described in section 448(d)(5) or in the legislative history.
H. Rept. 99-426, supra at 608, 1986-3 C.B. (Vol. 2) at 608,
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011