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Can you summarize Rev. Rul. 2004-52?
2004 - Revenue Rulings >
Short Summary
This revenue ruling clarifies the treatment of credit card annual fees for federal income tax purposes. It states that credit card annual fees are not considered interest for tax purposes. The ruling further explains that these fees are includible in the gross income of the card issuer when they become due and payable by the cardholders under the terms of the credit card agreements. The ruling emphasizes that the annual fees are not compensation for the use or forbearance of money, but rather charged for all the benefits and services available to the cardholder. The ruling also highlights the timing of including the annual fees in gross income, which is when the fee income becomes due and payable according to the agreements. It concludes by mentioning that card issuers have the option to account for annual fee income using the Ratable Inclusion Method for Credit Card Annual Fees, as described in Rev. Proc. 2004-32. This revenue ruling does not specify any penalties or exemptions.
Whom does it apply to?
Credit card issuers and cardholders
What does it govern?
Credit card annual fees
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
U.S. Federal Government