Page 564 - Large Business IRS Training Guides

Example 2

Goods and Services (cont’d)

• In its AFS, B includes

• 3/4 of the payment in revenue for 2018

• 1/4 of the payment in revenue for 2019

• B uses the deferral method so for federal income tax

purposes, B must include

• 3/4 of the payment in gross income for 2018

• the remaining 1/4 of the payment in gross income

for 2019 regardless of whether B completes the

job in 2019

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