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Tax Treatment of Gift Card and Certificate Sales

 

Become versed in tax treatment of gift card and certificate sales.

Tax treatment of advance payments has a colorful history in tax cases and IRS guidance. The proper treatment of gift card income and whether taxpayers can take advantage of income deferral provisions for gift revenue has received significant attention from both taxpayers and the IRS in recent years. There is exciting new guidance on gift cards and revenue recognition, allowing accrual method taxpayers to defer income from gift card sales to a year later than the year of receipt.

The gift card market is influenced by the rise in demand for technologically advanced products, increase in need for cashless transactions, the surge in application areas among end users, the high adoption rate of smartphones, and growth associated with e-commerce. Total annual gift card volume increases 6% per annum on average and is projected to reach $170 billion in 2019. Since gift cards are being used in many ways, many questions arise regarding the proper treatment of gift card income, further complicated by considerations of when income should be recognized and whether income deferral provisions are applicable?

Discuss and consider tax issues for gift cards. We will review IRS guidance addressing gift cards and taxpayer concerns, including when and whether an accounting method change may be used to change the timing of income recognition associated with gift cards.

Agenda

Faculty

Stephen B. Jordan, EA

Stephen B. Jordan, EA

Stephen B. Jordan, EA

  • Owner at Stephen B. Jordan, EA for more than 30 years
  • More than 35 years’ experience in accounting, auditing and tax services
  • Experience: Tax Defense Network – Referral Partner; Lorman Education Services; IRS Form 1099 Reporting: What You Need to Know; Tips for Understanding IRS Field Audits; Understanding Complex Internal Control Issues; Tax Treatment of Gift Cards & Sales Certificates; Past community outreach volunteer, NH Pro-Bono, Low Income Taxpayer Project; past community outreach volunteer, Bentley Low Income Taxpayer Clinic; past adjunct faculty of accounting and taxation at: Franklin Pierce College, 1988-1989; New Hampshire College, 1993; Hesser College, 1999; KPMG Peat Marwick – Sr Accountant, 1982 -1985; Wolf & Company CPA’s PC – Audit Supervisor/CISA, 1985 – 1986; General Cinema Corp – Sr Internal Auditor, 1986 – 1987; Comprehensive Accounting Corporation – Affiliate/Accountant 1987 – 1990; has written accounting and tax articles for EA Journal and National Public Accountant professional journals; speaker at self-help tax strategy seminars
  • Member of the NATP, NAEA, MaSEA and NNESEA
  • Currently lives in Windham, NH. Outside his practice, enjoys a variety of fitness activities, cooking, reading and the arts
  • M.S.T. degree, William Howard Taft University; College for Financial Planning; M.B.A. degree, Indiana University; B.S. degree, University of New Hampshire
  • Can be contacted at 603-508-0124 or [email protected]

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