- 23 -
Capital Gain 65 --- ---
Annuity Received by Mrs. Sutton --- 13,065 $13,068
Inherited IRA --- 23,579 ---
Interest Income --- 605 ---
OPINION
The Corporate Petitioner
Rebate and Coupon Checks
The corporate petitioner acknowledges that rebates are to be
considered in calculating its income. In some instances, the
corporate petitioner recorded rebates as a reduction to cost of
sales and in other instances, where rebates had been credited
against amounts owed to wholesalers, the corporate petitioner
reflected the net costs. Respondent agrees with that treatment.
To the extent, however, that the proceeds of rebate checks were
not accounted for by either of those methods, we hold that the
corporate petitioner had unreported income from rebate checks.8
In other words, if the rebate checks did not in some way reduce
cost of sales, then the cost of sales was overstated, and the
gross income was correspondingly understated.
The parties also agree that the coupons result in income;
they disagree, however, as to the proper treatment of that
income. Respondent has determined that the corporate
8 Petitioners have speculated that some rebate checks may
have been rung up on the register, thereby being included in
income twice, once in cash register gross receipts and again as a
result of reducing cost of sales as a rebate. Petitioners have
not established any such instances.
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