Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Take a Penny, Leave a Penny -- Pay the Tax?

02.02.2009
How do accountants and tax people consider the pennies sitting in those take a penny, leave a penny jars on store counters? If they wind up in the till, they're taxable income, says Cristi Gleason, an accounting professor at the University of Iowa's Tippie College of Business.

They sit next to cash registers in stores across America, little cardboard boxes or styrofoam cups or old plastic ashtrays.

"Take a penny, leave a penny," they say, or some variation -- a penny exchange that makes it easier for clerks to make change and for customers to avoid burdening their pockets with excess coins.

But at the end of the day (literally), where do those pennies fit on a store's bottom line? Cristi Gleason, an accounting professor at University of Iowa's Tippie College of Business, guesses that thousands of stores across the country have bowls filled with thousands of dollars in pennies that may or may not be properly accounted for.

"If the store sweeps them into the till, it counts as income," said Gleason, an expert in tax accounting. "As far as the IRS is concerned, it's taxable."

Although the penny bowls have become commonplace in stores across the country, Gleason doesn't believe any attempts have been made to figure out exactly how much money sits in them. Nor have any rules been issued that would require they be treated differently on an accounting or tax basis than any other income. On a store-by-store, day-to-day basis, she said the sums are so small that a handful of pennies will make little if any difference in a merchant's profit or tax bill.

"Realistically, the IRS won't care," she said. "They're not going to go looking for 10 or 12 cents in pennies."

But she said that if it's 10 or 12 cents everyday for a year, and it's at a few dozen or a few hundred stores under the same ownership, then someone might notice.

She said that's one reason why stores that are much larger than the mom-and-pop variety don't have countertop bowls full of pennies. And especially not in stores that are part of publicly traded companies and subject to the SEC's strict internal control and financial reporting rules requiring they maintain good cash management practices.

"You won't see them at McDonald's or Wal-Mart because those companies have extremely tight cash management procedures and they don't like to see pennies on the counter," she said.

Gleason said the penny jars have their benefits. They provide a service to customers who don't want to drag around a lot of low-value metal. They also limit the amount of change clerks have to make, reducing the risk of a change-making error that messes up the stores accounting.

She recommends, though, that stores keep the money from the bowls out of the register, and hope that as many people take a penny as leave a penny.

"In that case, the pennies are treated by the IRS to be a gift from one customer to another and the store isn't involved in the transaction at all," Gleason said.

Tom Snee | Newswise Science News
Further information:
http://www.uiowa.edu

More articles from Business and Finance:

nachricht Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik

nachricht RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Powerful IT security for the car of the future – research alliance develops new approaches

The more electronics steer, accelerate and brake cars, the more important it is to protect them against cyber-attacks. That is why 15 partners from industry and academia will work together over the next three years on new approaches to IT security in self-driving cars. The joint project goes by the name Security For Connected, Autonomous Cars (SecForCARs) and has funding of €7.2 million from the German Federal Ministry of Education and Research. Infineon is leading the project.

Vehicles already offer diverse communication interfaces and more and more automated functions, such as distance and lane-keeping assist systems. At the same...

Im Focus: Molecular switch will facilitate the development of pioneering electro-optical devices

A research team led by physicists at the Technical University of Munich (TUM) has developed molecular nanoswitches that can be toggled between two structurally different states using an applied voltage. They can serve as the basis for a pioneering class of devices that could replace silicon-based components with organic molecules.

The development of new electronic technologies drives the incessant reduction of functional component sizes. In the context of an international collaborative...

Im Focus: LZH showcases laser material processing of tomorrow at the LASYS 2018

At the LASYS 2018, from June 5th to 7th, the Laser Zentrum Hannover e.V. (LZH) will be showcasing processes for the laser material processing of tomorrow in hall 4 at stand 4E75. With blown bomb shells the LZH will present first results of a research project on civil security.

At this year's LASYS, the LZH will exhibit light-based processes such as cutting, welding, ablation and structuring as well as additive manufacturing for...

Im Focus: Self-illuminating pixels for a new display generation

There are videos on the internet that can make one marvel at technology. For example, a smartphone is casually bent around the arm or a thin-film display is rolled in all directions and with almost every diameter. From the user's point of view, this looks fantastic. From a professional point of view, however, the question arises: Is that already possible?

At Display Week 2018, scientists from the Fraunhofer Institute for Applied Polymer Research IAP will be demonstrating today’s technological possibilities and...

Im Focus: Explanation for puzzling quantum oscillations has been found

So-called quantum many-body scars allow quantum systems to stay out of equilibrium much longer, explaining experiment | Study published in Nature Physics

Recently, researchers from Harvard and MIT succeeded in trapping a record 53 atoms and individually controlling their quantum state, realizing what is called a...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

In focus: Climate adapted plants

25.05.2018 | Event News

Save the date: Forum European Neuroscience – 07-11 July 2018 in Berlin, Germany

02.05.2018 | Event News

Invitation to the upcoming "Current Topics in Bioinformatics: Big Data in Genomics and Medicine"

13.04.2018 | Event News

 
Latest News

In focus: Climate adapted plants

25.05.2018 | Event News

Flow probes from the 3D printer

25.05.2018 | Machine Engineering

Less is more? Gene switch for healthy aging found

25.05.2018 | Life Sciences

VideoLinks
Science & Research
Overview of more VideoLinks >>>