Purchasing discounts
Trade discounts. The differences between the stated prices of articles and the actual prices you pay for them are called trade discounts. You must use the prices you pay (not the stated prices) in figuring your cost of purchases. Do not show the discount amount separately as an item in gross income.
IRS Pub 334 Chapter 6 COGS, page 28
IRS Regs. Sec. 1.471-3(b) requires trade or other discounts to be treated as reductions in the purchase price of the inventory to which they relate, rather than as gross income.
So the end result of all that legaleeze is that a discount on what you buy for inventory is not income. The cost of the items purchased has to be reduced by the amount of the discount.
