When it comes to the Vacation Ownership industry, PBTK has a standard setting history. PBTK President and Founder L. Ralph Piercy has been involved in the vacation ownership industry since its infancy. He helped establish some of the initial accounting and reporting practices for the industry before the accounting profession issued industry-specific guidance. Many of the fundamental auditing principles Piercy developed while auditing American International Vacations, Inc., then one of the largest time-share companies with operations in Las Vegas, Hawaii, and Florida, continue to be used today.
James Wilcox, one of our tax principals, also played an instrumental role in getting the Internal Revenue Service (the Service) to approve the use of the installment sale method for timeshare sales in a manner that was very favorably to the industry. Specifically in connection with the 1988 Act (how interest on the tax deferral was to be calculated and used), Wilcox worked with the Treasury Department’s attorney to draft regulations to simply the calculation. Our terminology (“the mid-point method”) is now part of the regulations. The Service had first proposed to track each contract twelve times a year. Our suggestions and clarifications were part of the subsequent installment sales regulations. More recently in 2007, we successfully interpreted a Senate / House Committee report to allow the installment method for Alternative Minimum Tax (AMT) purposes. Most firms interpret the law in a way that required companies to pay AMT on the benefit of using the installment method. Our interpretation was that all tax including AMT could be deferred if an election was made to pay interest on the tax deferral. This treatment was upheld in audit and is very favorable to the industry.
Please contact us if your vacation ownership entity would like a free consultation regarding tax or audit services.