The IRS issued guidance (Rev. Proc. 2013-26; 2013-22 IRB 1) that
allows taxpayers to use a simplified proportional method of
accounting to compute original issue discount (OID) for pools of
credit card receivables (CCR pools).
The guidance is intended to reduce administrative burdens and
controversy for taxpayers in the computations of OID related to CCR
pools under Section 1272(a)(6).
Under the general rules of calculating OID, the taxpayer must
know the debt instrument's stated redemption price at
maturity (SRPM) and the maturity term. But calculating OID for
debts that do not have a known maturity upon inception, like credit
card debt, requires calculations under an alternative rule, found
under Section 1272(a)(6). Under that section, OID accruals are
determined based on a prepayment assumption and a formula involving
(i) the present value of all remaining payments under the debt
instrument as of the close of the accrual period, (ii) payments
during the accrual
