- 13 -
OPINION
1. Rev. Proc. 71-21, 1971-2 C.B. 549
Petitioner argues that, under Rev. Proc. 71-21, 1971-2 C.B.
549, it may report its income from annual membership fees ratably
over a 12-month period on the grounds that the fees were for
services it performed ratably over that period.
Income must be reported in the taxable year in which the
taxpayer receives it, unless, under the taxpayer’s method of
accounting, the item of income is properly accounted for in a
different period. Sec. 451(a). Petitioner is an accrual method
taxpayer. An accrual method taxpayer recognizes income when all
the events have occurred which fix the right to receive the
income and the amount of the income can be determined with
reasonable accuracy. Schlude v. Commissioner, 372 U.S. 128, 137
(1963); secs. 1.446-1(c)(1)(ii), 1.451-1(a), Income Tax Regs.
Under Rev. Proc. 71-21, supra, an accrual basis taxpayer
that receives payments in one taxable year for services to be
performed not later than the next taxable year may, in certain
circumstances, include the payments in gross income ratably as
earned through the performance of the services, rather than when
received. Rev. Proc. 71-21, supra at 549-550, 1971-2 C.B. 549,
states in part:
Section 1. Purpose
The purpose of this Revenue Procedure is to
implement an administrative decision, made by the
Commissioner in the exercise of his discretion under
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011