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rather than as an item of gross income. Petitioners have not
argued that, in the event we decide that the second warrant
represented a trade discount, that treatment is incorrect.
Respondent also does not dispute that treatment, arguing simply
that the net proceeds of the sale of the second warrant
constitutes either ordinary income to CV or a reduction in its
cost of goods sold. We, therefore, hold that the entire amount
of the net proceeds of sale of the second warrant is a reduction
in CV’s cost of goods sold.
To reflect concessions and the foregoing,
Decisions will be entered
under Rule 155.
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