Income Recognition by Credit Card Providers: Developments and Difficult Issues
Author: Gary M. Wells.
Source: Volume 19, Number 04, March/April 2006 , pp.5-12(8)
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Abstract:
Credit card interest and transaction fees earned by issuers have garnered the attention of the Department of the Treasury, as well as the IRS, over the last few years, which has started to focus substantial resources on credit card income recognition issues, particularly interest and other fees derived from credit cards and the associated accounting methods affecting their recognition for federal tax purposes. The number of recent pronouncements directed solely at credit card issuers demonstrate the difficult analyses and choices credit card issuers need to confront and resolve. Credit card providers are discovering that recent guidance contains additional restrictions tending to favor current income recognition. Where relief provisions are available, taking advantage of them may involve greater complexity, such as in the calculation of original issue discount.Keywords:
Affiliations:
1: Sallie Mae, Inc..