A bill to amend the Internal Revenue Code of 1954 to provide for a special tax accounting rule for the redemption of trading stamps and coupons.

Summary

Amends the Internal Revenue Code to permit an accrual basis taxpayer who issues trading stamps or coupons in connection with the sale of merchandise, or gratuitously, an election to exclude from gross income the cost of the merchandise, cash, and other property used to redeem such stamps or coupons in the taxable year plus the net addition (or less the net subtraction) to the provision for future redemptions. Defines the net addition to the provision for future redemptions as the excess of the amount of estimated future redemptions (a reasonable estimate of the number of stamps or coupons that will ultimately be presented for redemption multiplied by the average cost of redemption) over the same amount for the preceeding taxable year. Defines the net subtraction from the provision for future redemptions as the excess of the amount of estimated future redemptions for the preceeding taxable year over the estimate for the current year. Permits the determination of the estimated future redemptions for a taxable year according to a percentage method, a probability sampling method, or any method which, consistently applied, results in a reasonably accurate estimate of the amount of outstanding stamps or coupons at the end of the taxable year that will ultimately be presented for redemption.

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Documents

2 official files

• Reported to House with amendment(s)

  summary · EN · 4 October 1978

  Open at official source

• Introduced in House

  summary · EN · 8 June 1978

  Open at official source

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