Signet Banking Corporation - Page 19

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          (because “when you use your Account you’ve agreed to the terms in           
          this agreement”), petitioner in effect argues here that it is not           
          so important after all.                                                     
               Petitioner points out that Rev. Proc. 71-21, supra, says               
          that services must be provided by the close of the taxable year             
          following the year of payment and that it does not say that the             
          agreement must require services to be performed in the later                
          year.  Petitioner’s point is literally true, but it is at best              
          misleading.  First, to allow deferral of reporting of income to a           
          time later than all the events occurred which fix the taxpayer’s            
          right to receive the income is contrary to undisputed accrual               
          accounting principles.  See secs. 1.446-1(c)(1)(ii), 1.451-1(a),            
          Income Tax Regs.  Second, Rev. Proc. 71-21, supra, allows income            
          to be reported in the next taxable year “as earned through the              
          performance of * * * services”.  Rev. Proc. 71-21, sec. 3.02.  It           
          is inherent in this language that petitioner must show that the             
          payment was made at least in part for services to be performed in           
          the next taxable year.  See also id. secs. 1 and 2.  As discussed           
          above, the cardholder agreement clearly establishes that this is            
          not the case here.                                                          
               Petitioner reissued credit cards evenly throughout the year,           
          and reissuance did not necessarily coincide with the date                   
          petitioner charged the annual membership fee.  However,                     
          petitioner has not shown that one of the acts for which the                 
          annual membership fee was paid--the issuance of a card--occurred            



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