Page 565 - Large Business IRS Training Guides

Example 3

Gift Cards – Rev. Proc. 2004-34

• F, a hair styling salon, receives advance payments

for gift cards that may later be redeemed at the salon

for hair styling services or hair care products at the

face value of the gift card.

• The gift cards look like standard credit cards, and

each gift card has a magnetic strip that, in connection

with F's computer system, identifies the available

balance.

• The gift cards may not be redeemed for cash and

have no expiration date.

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