Page 50 - Tax Reforms - Businesses

Advance Payments for Goods and Service (4/5)

Section 451 ( c ) NPRM

1 Changes in • This notice of proposed rulemaking provides guidance on the

Accounting
timing of income inclusion for advanced payments under
Periods
section 451(c). Section 451 was amended by section 13221 of
the Tax Cuts and Jobs Act.
2 Section 451 (b) • These proposed rules affect accrual method taxpayers that
NPRM
receive advance payments that elect to use the deferral
method.
3 Section 451 ( c ) taxpayer that receives an advance payment is required to
•
Under section 451(c), as amended, an accrual method
NPRM
include the amount in income in the taxable year of
receipt. Section 451(c) also provides a deferral method for
certain advance payments for goods, services, and other
4 Corporate specified items by allowing an accrual method taxpayer to
Methods of
elect to defer the inclusion of income associated with certain
Accounting
advance payments to the taxable year following the year of
receipt if such income is also deferred for AFS purposes.
• These proposed regulations provide guidance on the use of
the deferral method of accounting under section 451(c) for all
accrual method taxpayers that receive advance payments,
including defining the term advance payment, and that the
deferral method is a method of accounting under section 446
and the accompanying regulations.
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