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proceeds represented the amount of the seller's gross income
attributable to the sales. We must presume that they were well
aware that gross income from sales of inventory equals sales
proceeds minus cost of goods sold. That they were referring only
to the tax treatment of receipts is also inferable from their
formulation of the relevant all events test; it would not make
sense to apply this test to accrual of costs. Similarly, when
the committees stated that the return of excess copies is
accounted for by a "reduction of gross sales" or "exclu[sion]
from income", they could not have meant that gross income was
reduced by this amount, since the seller's cost of goods sold
must be reduced as well. Sec. 1.471-1, Income Tax Regs. If
Congress was not referring to amounts of gross income when it
discussed the accrual of income under current law, it is only
reasonable to infer that Congress was also not referring to
amounts of gross income when it defined the scope of the election
not to accrue.
For whatever reason, Congress did not choose to formulate
the problem of merchandise returns in terms of gross income. We
can only conclude that Congress simply was not concerned with the
inventory and cost accounting issues that the returned
merchandise problem involved, and consequently could not have
possessed a specific intent to prescribe, or preclude, rules to
handle these issues.
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