IRS Adopts Westpac


The IRS said it will follow the ruling of the Ninth Circuit Court of Appeals in Westpac Pacific Food v. Commissioner (97 AFTR2d 2006-3014) concerning timing of recognition of volume trade discounts paid as cash advances. Westpac, a West Coast partnership of grocery retailers, received advances from manufacturers in exchange for its promises to purchase goods. The advances had to be repaid if Westpac failed to buy the contracted amounts. The IRS and Tax Court held that the advances were income when received; the Ninth Circuit ruled they could be recognized as a reduction of cost of goods at the time of purchase. For more on the decision, see “ Tax Matters,” JofA, Dec. 06, page 80. In Rev. Proc. 2007-53, the IRS outlined how accrual-method taxpayers may adopt the method, including automatic consent to the change.

SPONSORED REPORT

Tax reform changes are now in effect

With all the recent tax law changes, this year it’s more important than ever to make sure your clients’ tax situations are squared away before year end. This report provides necessary guidance to ensure 2019 starts without a hitch.

PODCAST

Using drones to enhance audits

Hermann Sidhu, CPA, global assurance digital leader at EY, walks us through EY’s exciting new project to use drones to help audit large warehouses and outdoor inventories.