Advance Trade Discounts: A Reprise

9 Pages Posted: 14 Dec 2007

See all articles by Deborah A. Geier

Deborah A. Geier

Cleveland State University, Cleveland-Marshall College of Law


This report reviews the various possible conceptual approaches that can be applied to advance trade discounts for income tax purposes. While concerns for administrative ease make conceptual purity unlikely in this context, the author believes that we can do a far better job than is apparent in two recent cases and a revenue procedure. The key inquiry that should be made (but which was ignored in all three authorities) is whether the recipient of the cash advance trade discount paid market rate interest for the time value of deferring inclusion.

Keywords: taxation of advance trade discounts, taxation of loan proceeds

Suggested Citation

Geier, Deborah A., Advance Trade Discounts: A Reprise. Tax Notes, Vol. 117, December 17, 2007, Cleveland-Marshall Legal Studies Paper No. 07-152, Available at SSRN:

Deborah A. Geier (Contact Author)

Cleveland State University, Cleveland-Marshall College of Law ( email )

2121 Euclid Avenue, LB 138
Cleveland, OH 44115-2214
United States
216-687-2341 (Phone)
216-687-6881 (Fax)


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