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returns of the periodical. H. Rept. 94-1354, at 6-7 (1976). The
Senate Finance Committee, however, did not act on the bill, and
it languished, partly because of the efforts of the paperback
book and record industries, with the support of Treasury, to
extend its coverage. Ways and Means Committee Hearings, 218-220.
The bill was resurrected, however, in the 95th Congress as H.R.
3050 and, after its coverage was extended to these industries, it
was passed by both committees and incorporated in this form into
the Revenue Act of 1978.
Section 458 provides, in pertinent part:
SEC. 458(a). Exclusion From Gross Income.--A
taxpayer who is on an accrual method of accounting may
elect not to include in the gross income for the
taxable year the income attributable to the qualified
sale of any magazine, paperback, or record which is
returned to the taxpayer before the close of the
merchandise return period.
(b) Definitions and Special Rules.--For purposes
of this section --
* * * * * * *
(5) Qualified sale.--A sale of a magazine,
paperback, or record is a qualified sale if--
(A) at the time of sale, the
taxpayer has a legal
obligation to adjust the sales
price of such magazine,
paperback, or record if it is
not resold, and
(B) the sales price of such
magazine, paperback, or record
is adjusted by the taxpayer
because of a failure to resell
it.
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