IRS continues to challenge deferral of revenue from gift cards.
The Tax Adviser › Vol. 40 Nbr. 6, June 2009
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Extract
IRS continues to challenge deferral of revenue from gift cards.
In recent years, due to the increasing use of gift cards and the disparity between the federal tax accounting and financial accounting treatment of advance payments, there has been inconsistency among taxpayers and confusion as to the proper timing of recognizing income from gift cards. One specific issue that has arisen is the treatment of gift card income when a taxpayer maintains a separate gift card company that is responsible for selling the cards and operating the gift card program for it and other related entities but does not itself sell or provide the goods for which the cards can be used. The IRS recently addressed this issue in Technical Advice Memorandum (TAM) 20084...
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