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billing dispute; and that petitioner may change the cardholder
agreement at any time. However, the cardholder has no assurance
that those services will continue; petitioner can cancel the card
at any time without refunding the annual membership fee.
Similarly, petitioner argues that it should be allowed to
defer reporting the fees at issue here because they are called
“annual membership fees”. We disagree because the name of the
fee does not override (nor does petitioner contend that it
overrides) the provisions of the agreement that establish the
rights and obligations of the parties.
Petitioner argues that respondent’s reliance on the
cardholder agreement improperly places form over substance.
Under petitioner’s argument, the “substance” of the transaction
is that petitioner provides many services for cardholders
throughout the year, and the “form” of the transaction is found
in the cardholder agreement. We disagree. The cardholder
agreement establishes the rights of cardholders and the card
issuer. It provides that the payment is in consideration of the
issuance of the card and establishment of a credit limit. An
accrual method taxpayer recognizes income when all of the events
have occurred which fix the right to receive the income. Secs.
1.446-1(c)(1)(ii), 1.451-1(a), Income Tax Regs. Contrary
to petitioner’s contention, the rights and obligations of the
parties are the substance of the matter. Even though petitioner
urged cardholders to read and retain a copy of the agreement
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