A retail loyalty card provides shoppers discounted prices in exchange for the right to track their purchases and build a customer profile.
(I'll stipulate that, in practice, these discounts are a non-event for income tax purposes because approximately nobody tracks or reports them. My interest is in the technical answer.)
Technically, are these discounts a form of taxable income? If so, what type of income? If not, is there something specific in the tax code or legal precedent that applies?
To make it more concrete, let's say my member discounts on groceries for last year totaled $1000.
These are not just promotional discounts available to anyone. They are available only to customers who've agreed to the program rules. Those rules grant the vendor rights to the customer's data. Had I refused the membership agreement and still bought the same goods at the same store, I would have spent $1000 more.
So, in effect, I exchanged some rights to certain data for $1000 worth of food and sundries.
Did I sell the data for $1000?
Did I barter with the grocery store?
Did I earn $1000 in royalties by licensing data to the vendor?
Did I create consumer purchase data as an independent contractor and receive $1000 of goods from the vendor as compensation?
