Become versed in tax treatment of gift card and certificate sales.
Tax treatment of advance payments has a colorful history in tax cases and IRS guidance. The proper treatment of gift card income and whether taxpayers can take advantage of income deferral provisions for gift revenue has received significant attention from both taxpayers and the IRS in recent years. There is exciting new guidance on gift cards and revenue recognition, allowing accrual method taxpayers to defer income from gift card sales to a year later than the year of receipt.
The gift card market is influenced by the rise in demand for technologically advanced products, increase in need for cashless transactions, the surge in application areas among end users, the high adoption rate of smartphones, and growth associated with ecommerce. Total annual gift card volume increases 6 per annum on average and is projected to reach 170 billion in 2019. Since gift cards are being used in many ways, many questions arise regarding the proper treatment of gift card income, further complicated by considerations of when income should be recognized and whether income deferral provisions are applicable?
Discuss and consider tax issues for gift cards. We will review IRS guidance addressing gift cards and taxpayer concerns, including when and whether an accounting method change may be used to change the timing of income recognition associated with gift cards.
Review Income Recognition Rules, IRC §451 and Administrative Guidance That Allows Income Deferral for Advance Payments
History and Development of Primary Authority
Discuss Application of Advance Payment Guidance for Gift Cards
Review IRS Initiatives Designed to Address the Treatment of Advance Payments for Gift Card Income
Evaluate IRS Guidance Addressing Gift Cards and Provide Practice Tips for Implementation
Gift Card Considerations and Outstanding Issues Not Addressed by IRS Guidance
Examples and Case Law Considerations
Stephen B. Jordan, EA with Stephen B. Jordan, EA
AIPB ,CPP/FPC (Pending) ,CPE ,Enrolled Agents ,Additional credit may be available upon request.