Rev. Rul. 60-293

The Internal Revenue Service will not follow the decision of the United States District Court for the District of Massachusetts in Consolidated Dry Goods Company v. United States , 180 Fed.Supp. 878.

The District Court held that the taxpayer's Cycle Budget Account Plan was fairly embraced within the meaning of the words `installment plan' as used in section 453(a) of the Internal Revenue Code of 1954 and section 44(a) of the Internal Revenue Code of 1939 and that, accordingly, taxpayer was entitled to report all of such sales on the installment method.

Under the Cycle Budget Account Plan, a customer was extended credit of a specified amount, was permitted to purchase goods up to his credit limit, and was required to pay each month the smaller of the balance in his account or a fixed amount representing a fraction of the maximum amount of credit which would be extended to him under the plan.

The taxpayer's Cycle Budget Account Plan in this case appears to be fairly typical of `revolving credit' plans adopted by a considerable number of taxpayers within the past few years.

However, it is the position of the Revenue Service that the fact that sales are made pursuant to a revolving credit plan is not determinative of whether such sales are to be regarded as installment sales. A study is now under way as to whether workable standards can be formulated for determining what part of revolving credit sales qualify as sales `on the installment plan' under the statutory provisions mentioned above.

¹ Based on Technical Information Release 247, dated August 23, 1960.