Thông báo: Nội dung lịch sử

Đây là một tài liệu lưu trữ hoặc lịch sử và có thể không phản ánh luật pháp, chính sách hoặc thủ tục hiện hành.

Treatment of Upfront Payments to Restaurant Owners From Suppliers Under Supplier Agreements

It is common in the restaurant industry for suppliers to enter into supplier arrangements with restaurants, typically these arrangements extend beyond the taxable year. For example, suppose that Supplier A enters into an agreement with a restaurant chain to supply soft drink concentrate. The contract states that the supplier will advance $5,000,000 to the restaurant chain immediately and in return the restaurant chain agrees to purchase all of its soft drinks from Supplier A for the next 5 years.

Technical Advice Memorandum 9719005 discusses the treatment of upfront payments received under supplier agreements and states that upfront payments are income upon receipt. Many taxpayers will recognize this income ratably over the life of the contract.