Warrants issued to customers.

The Tax Adviser | November 1, 2003 | Copyright

During the 1980s and 1990s, some equity prices became severely inflated; consequently, many companies looked for ways to capitalize oil their increased share price by using their stock as currency. One idea was to issue customers warrants to motivate them to purchase a certain amount of product. This effectively gave the customer the potential to realize a significant discount on products purchased and provided a seller the means to offer a purchase incentive. The IRS and taxpayers have disputed the appropriate tax treatment of these warrants--while taxpayers argue they ...

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