Page 560 - Large Business IRS Training Guides

Example 1

Allocable Payment - Rev. Proc. 2004-34

• Q is in the business of selling and licensing computer

software (off the shelf, fully customized, and semi-

customized) and providing customer support.

• On July 1, 2018, Q receives an advance payment of

$100 for a 2-year software license agreement that

• includes a 1-year “software maintenance contract”

under which Q will provide software updates if it

develops an update within the contract period, and

online and telephone customer support, as well.

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