Ninth Circuit Affirms CCRC’s GAAP Accounting Method for Recognizing Deferred Entrance Fees

• November 01, 2024

• Fred Weil , Hanson Bridgett LLP

Although the Commissioner of Internal Revenue (Commissioner) has broad discretion over the approval of a taxpayer's method of accounting, that discretion is not unlimited, according to a recent Ninth Circuit decision affirming a U.S. Tax Court ruling in favor of an entity operating a retirement community. The Ninth Circuit and Tax Court rulings provide important lessons for accrual method taxpayers whose rights to income are conditioned on their performance, and especially for operators of for-profit retirement communities that offer to care for residents for the rest of their lives.

ARTICLE TAGS

• Tax and Finance Practice Group
• Tax and Nonprofit