Signet Banking Corporation - Page 15

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               properly deferred under the preceding sentence and for                 
               any reason a portion of such services is not performed                 
               by the end of the next succeeding taxable year, the                    
               amount allocable to the services not so performed must                 
               be included in gross income in such next succeeding                    
               year, regardless of when (if ever) such services are                   
               performed.                                                             
          *   *   *   *   *   *   *                                                   
                    .06  In any case in which an advance payment is                   
               received pursuant to an agreement which requires the                   
               taxpayer to perform contingent services, the amount of                 
               an advance payment which is earned in a taxable year                   
               through the performance of such services may be                        
               determined (a) on a statistical basis if adequate data                 
               are available to the taxpayer; (b) on a straight-line                  
               ratable basis over the time period of the agreement if                 
               it is not unreasonable to anticipate at the end of the                 
               taxable year of receipt that a substantially ratable                   
               portion of the services will be performed in the next                  
               succeeding taxable year; or (c) by the use of any other                
               basis that in the opinion of the Commissioner, results                 
               in a clear reflection of income.                                       
          *   *   *   *   *   *   *                                                   
                    .11  The amount of any advance payment includible                 
               as gross receipts in gross income in the taxable year                  
               of receipt by a taxpayer under the foregoing rules                     
               shall be no less than the amount of such payment                       
               included as gross receipts in gross income for purposes                
               of his books and records and all reports (including                    
               consolidated financial statements) to shareholders,                    
               partners, other proprietors or beneficiaries and for                   
               credit purposes.                                                       
          2.   Whether Petitioner Performed Services for Cardholders                  
               Ratably Over 12 Months                                                 
               Petitioner points out that it performed many services for              
          its MasterCard cardholders throughout the year and contends that            
          it earned income from annual membership fees ratably over the 12-           
          month period covered by those fees.  We disagree with                       
          petitioner’s contention.                                                    



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Last modified: May 25, 2011