Page:United States Statutes at Large Volume 92 Part 3.djvu/231

 PUBLIC LAW 95-600—NOV. 6, 1978

92 STAT. 2863

SEC. 373. QUALIFIED DISCOUNT COUPONS REDEEMED AFTER CLOSE OF TAXABLE YEAR.

(a) GENERAL RULE.—Subpart C of part II of subchapter E of chapter 1 of the Internal Revenue Code of 1954 (relating to taxable year for which deductions taken) is amended by adding at the end thereof the following new section: "SEC. 466. QUALIFIED DISCOUNT COUPONS REDEEMED AFTER CLOSE OF TAXABLE YEAR.

"(a) ALLOWANCE OF DEDUCTION.—At the election of a taxpayer whose taxable income is computed under an accrual method of accounting, the deduction allowable under this chapter for the redemption costs of qualified discount coupons shall be an amount equal to the sum of— "(1) such costs incurred by the taxpayer with respect to coupons— "(A) which were outstanding at the close of the taxable year, and "(B) which were received by the taxpayer before the close of the redemption period for the taxable year, plus "(2) such costs (other than costs properly taken into account under paragraph (1) for a prior taxable year) incurred by the taxpayer during the taxable year. "(b) QUALIFIED DISCOUNT COUPONS.—For purposes of this section— "(1) IN GENERAL.—The term 'qualified discount coupon' means a discount coupon which— "(A) was issued by the taxpayer, "(B) is redeemable by the taxpayer, and "(C) allows a discount on the purchase price of merchandise or other tangible personal property.

26 USC 466.

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"(2) METHOD OF ISSUANCE NOT TAKEN INTO ACCOUNT.—The

determination of whether or not a discount coupon is a qualified discount coupon shall be made without regard to whether the coupon was issued through a newspaper, magazine, or other publication, by mail, on the pack or in the pack of merchandise, or otherwise. "(3) DISCOUNT ON ITEM CANNOT EXCEED $5.—A coupon shall not be a qualified discount coupon if— "(A) the face amount of such coupon is more than $5, or "(B) such coupon may be used with other coupons to bring about a price discount of more than $5 with respect to any item. "(4) THERE MUST BE REDEMPTION CHAIN.—A coupon shall not be a qualified discount coupon if the issuer directly redeems such coupon from the person using the coupon to receive a price discount. For purposes of the preceding sentence, corporations which are members of the same controlled group of corporations (within the meaning of section 1563(a) as the issuer shall be 26 USC 1563. treated as the issuer. "(5) REDEEMABLE BY TAXPAYER.—A coupon is redeemable by the taxpayer if the terms of the coupon require the taxpayer to redeem the coupon when presented for redemption in accordance with its terms. "(c) REDEMPTION COSTS; REDEMPTION PERIOD.—For purposes of this section— "(1) REDEMPTION COSTS.—The term 'redemption cost' means, with respect to any coupon—

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