Inorder to obtain shelf space at Albertsons for its new

Inorder to obtain shelf space at Albertsons for its new product, “Healthly Coke”, Monstrous Beverage has agreed to pay Albertsons $1 million for 2 feet of top shelf space in a total of 500 stores for one year. The fee is non refundable and Albertson’s can cancel purchase orders (and use space for other merchandise) to the extent the purchased drinks do not “sell through” every 30 days. For tax purposes, how should Monstrous record the payment to Albertsons: Is it deductible when paid or should the tax deduction be deferred and deducted over the period benefited?

 

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