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concerned exclusively with the gross receipts side of the
returned merchandise problem.
Both the House Ways and Means Committee report and the
Senate Finance Committee report on H.R. 3050 contain
substantially identical language describing the tax treatment of
returned merchandise under prior law. It reads:
Under present law, sellers of merchandise who use an
accrual method of accounting generally must include
sales proceeds in income for the taxable year when all
events have occurred which fix the right to receive the
income and the amount can be determined with reasonable
accuracy. [H. Rept. 95-1091, at 3 (1978); S. Rept. 95-
1278, at 4 (1978); emphasis added.]
An earlier report prepared for the House Ways and Means Committee
by the Joint Committee on Taxation contains the following
passages on current law:
When sold goods are returned to a taxpayer during a
taxable year the return generally is treated as a
reduction of gross sales for purposes of financial and
tax accounting. * * *
* * * The Internal Revenue Service has taken the
position that accrual basis publishers and distributors
must include the sales of the periodical in income when
the periodicals are shipped to the retailers and may
exclude from income returns of the periodicals only
when the copies are returned by the retailer during the
taxable year. [Staff of the Jt. Comm. on Taxation,
Description of Technical and Minor Bills Listed for a
Hearing before the Subcommittee on Miscellaneous
Revenue Measures of the Committee on Ways and Means on
September 7 and 9, 1977, at 28-29 (1977); emphasis
added.]
Identical language appears in H. Rept. 94-1354, at 2-3 (1976).
When the committees stated that under current law sales
proceeds are included in income, they did not mean that the sales
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