- 18 - 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.Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
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