Page 566 - Large Business IRS Training Guides

Example 3

Gift Cards (cont’d)

• In its AFS, F includes advance payments for gift cards

in revenue when redeemed.

• F is not able to determine the extent to which advance

payments are included in revenue in its AFS for the

taxable year of receipt which is a requirement to use

the deferral method under Rev. Proc. 2004-34.

• Therefore, F may not use the deferral method under

Rev. Proc. 2004-34 for these advance payments.

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