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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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