- 22 -
income as payments when received from cardholders on their
accounts, Rev. Rul. 78-40, 1978-1 C.B. 136, and which an accrual
method bank should include in income as it makes remittances to
the merchants. Rev. Rul. 71-365, 1971-2 C.B. 219. Those rulings
are entirely consistent with our holding here because they
require cash basis banks to report income when received and
accrual basis banks to report income under the all events test.
3. Relationship to Regulatory and Financial Accounting
Petitioner reported annual membership fees ratably over 12-
month membership years for financial accounting, shareholder
reporting, and regulatory reporting purposes from 1981 through
the years in issue. Petitioner contends that this treatment is
authorized for banks that charge periodic fees to credit card
holders by an audit guide prepared by the Banking Committee of
the American Institute of Certified Public Accountants and by
Instructions to the Consolidated Reports of Condition and Income
(Call Reports) issued in 1983 by the Federal Financial
Institutions Examination Council for use by the three Federal
banking agencies, the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, and the Office
of the Comptroller of the Currency. Petitioner argues that its
reporting for those purposes supports its identical reporting for
income tax purposes. We disagree. Petitioner’s deferral of
cardholder income for financial accounting, regulatory, or other
purposes does not determine the proper Federal income tax
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011