Can you read?
Once again....you and I are only allowed gifts of cash to a max of 11 thousand something a year. After that, we must pay taxes on it.
And yet, in defiance of all that I’ve written, you still respond, stupidly, that a business should be allowed to keep MILLIONS of dollars a year, tax free.
For isn’t this money now essentially a contribution?
I did write a long explanation that most of these cards have expiration dates. I also wrote, which you obviously did not read, that this is for a reason. Once the date of the gift card expires, it CANNOT be redeemed. I’ll grant you the expiration date might be a couple of years nowadays but once it’s written off...and businesses cannot keep this liability on their books forever, it CANNOT be redeemed.
Now, once the money can’t be redeemed then the business should be allowed to keep it? What...tax free? Is this business a charity? I gave you a hundred bucks on a Visa card, you didn’t use it, the card expired, now the bank on which I drew the funds gets this...what...free contribution of cash? For once it’s written off it’s free money.
I’m done. You people might be fine conservatives some of you, but you’re going the liberal route of knee jerk responses without thinking it through.
conservatives generally read and comprehend.
I’m done with you tooo....go back and read.
No. Actually, in most cases, it a a prepayment for a retail sale to be completed by the recipient of the gift card. It is kind of like any other prepaid expense as when someone pays in advance for a product or service. The gift is between the "giftor" and the "giftee". The merchant sees the transaction as a prepayment toward a future sale and should count the prepayment as a liability.
The rub comes when the sale is not completed. If the card expires, it is no longer a liability. Also, the card would also loose its characterization as a liability once the merchant determines that it is unlikely to be redeemed regardless of whether it has a stated expiration date.
In the case of prepaid expenses that exceed the amount of the actual expense, merchants generally refund the prepaid balance to the customer. In the case of a gift card, refunding the amount of the unused prepayment makes sense theoretically but it may not be practical.
It is clear that the merchant cannot properly keep the money. If he keeps it, it clearly is taxable income. Perhaps he could dispose of it as a charitable donation. I hate the idea that the state gets it by default just because of the passage of time.
Why do you assume the money businesses get from unused gift cards is tax free? Once the card expires, the liability is liquidated and a revenue is recorded. This goes into the income statement and is therefore taxable.
The business contributed nothing. Their interest in the transaction has nothing to do with "gifts" or "gift taxes". The concept of "gift" exists between the purchaser of the gift card and the eventual recipient of the card. The concept of "gift" has nothing to due with the business that sells the card.
You are very very confused.