Client issues credit cards and changed to new one. The deposit they get from the new credit card company has only one stipulation and that is not to use any for the promotion of any other credit card. Now there are costs they will incur to get going and distribute, that for sure will eat up i/2 the costs. Then there are variable costs in the promotion, when does the advance become income, they do not believe they will ever spend the amount left for promotion? There is no requirement that they spend it all on the initial distribution.
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Constructive Receipt
Jon, the doctrine of "constructive receipt" requires such a deposit to be taxable as revenue when received.
"Constructive" receipt differs from a true deposit when there is no performance or other consideration placed on the recipient upon getting the money.
For a cash basis taxpayer, ALL receipts are Revenue anyway, so the doctrine is not applicable.
For an accrual basis taxpayer, a receipt which places the burden of future performance is a "deposit" with deferred revenue recognizable when such performance is consummated. If there is no future performance or consideration at the time of receipt, then it is immediately revenue in the period received - even if taxpayer is accrual-based.
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