SECTION 4. APPLICATION

.01 The proportional method of accounting described in section 5 of this revenue procedure is a permissible method for use by a taxpayer within the scope of this revenue procedure to account for OID on a pool of credit card receivables described in section 3 of this revenue procedure. If the proportional method is used by a taxpayer to account for any pool of credit card receivables, the method must be used for every pool of credit card receivables described in section 3 of this revenue procedure and held by that taxpayer. If the proportional method is used for more than one such pool, separate data for each pool must be kept, and the computations must be made separately based on the data for each pool.

.02 For purposes of this revenue procedure, a taxpayer within the scope of this revenue procedure that acquires a pool of credit card receivables (or an interest in such a pool) may treat the difference between the aggregate balance (or the taxpayer’s share of the balance) owed on all credit card receivables included in the pool other than amounts representing charges or fees that are not properly treated as OID (such as finance charges that are qualified stated interest) and the taxpayer’s basis as OID. As a result, a taxpayer may use the proportional method for certain amounts

ing the proposed revenue procedure. The Department of the Treasury and the Internal Revenue Service (“IRS”) considered all comments received, and modified the proposed revenue procedure in response to the comments. The significant changes in this revenue procedure from the proposed revenue procedure are as follows:

(1) The revenue procedure applies to any taxpayer that holds a pool of credit card receivables and is not limited to credit card issuers;

(2) A taxpayer may use the proportional method for amounts treated by the revenue procedure as OID (for example, amounts that otherwise are market discount);

(3) When individual accounts are transferred out of a pool or written off, a taxpayer may attribute to those accounts a portion of a pool’s unaccrued OID that is proportional to their outstanding balances; and

(4) A taxpayer may adopt the proportional method, or change to the proportional method under the automatic consent procedures, for a taxable year that ends on or after December 31, 2012.