The Tax Adviser Publishes Accrued Liabilities Article Co-Written by John Skarbnik

MARC of counsel John H. Skarbnik has co-authored an article, “Giant Eagle and Economic Performance Under Sec. 461(h),” in the April 2017 issue of The Tax Adviser.

John and Frank L. Brunetti analyzed the holding and reasoning of the U.S. Court of Appeals for the Third Circuit in Giant Eagle Inc. v. Commissioner, which allowed the grocery chain’s tax deductions on shoppers’ earned, but not yet redeemed, loyalty discount rewards.

The court found that Giant Eagle “demonstrated the existence — as of year’s end — of both an absolute liability and a near-certainty that the liability would soon be discharged by payment.” The court reasoned that Giant Eagle entered into a binding, unilateral agreement with customers when groceries were purchased, which established liability.

As a result, the court held that Giant Eagle was entitled to a $3.7 million tax deduction. The ruling reversed a U.S. Tax Court decision that the liabilities were not yet fixed.

The Tax Adviser is a monthly publication of the American Institute of CPAs.

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