Every December, Maxo Inc., an accrual basis, calendar year corporation, purchases 3,500 calendars from a publisher and mails them to its customers as a holiday gift.
This year, Maxo received a $14,420 bill from the publisher, which represented a sizeable price increase from prior years. Maxo scheduled a January meeting with the publisher to discuss the contested bill.
Identify the tax issue or issues suggested by the following situations, and state each issue in the form of a question.