The Tax Court refused to “reward” a corporation when it failed to include customer rewards program revenue in its gross income. The IRS had determined that the taxpayer’s method of accounting was improper because it didn’t treat the program’s operating fund revenue as taxable. The corporation argued it could exclude the revenue because its use of the fund was legally restricted. But the court ruled the taxpayer’s beneficial economic interest was sufficient to require the revenue’s inclusion. The court also said the taxpayer couldn’t use the “trading stamp” accounting method, which would have allowed the taxpayer to offset the cost of certain redemptions against gross receipts.
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