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TREAS/IRS RIN: 1545-BO78 Publication ID: Fall 2018 
Title: Guidance on New Section 451(c) 

Section 451 generally governs the timing of income and provides that any item of gross income shall be Included in the gross income for the taxable year in which received by the taxpayer, unless, under the method of accounting used in computing taxable income, such amount is to be properly accounted for as of a different period.  In general, amounts received by an accrual method taxpayer for goods or services to be provided in the future (advance payments) must be included in gross income in the taxable year of receipt.  See 451; Schlude v. Commissioner, 372 U.S. 128 (1963); Rev. Rul. 84-31, 1984-1 C.B. 127.

Generally, under 451(c), for an accrual method taxpayer, deferral is permitted to the extent that an advance payment received is not recognized as revenue in an applicable financial statement in the year the payment is received. Any remaining portion of such advance payment is recognized in gross income in the taxable year following the taxable year in which such payment is received.  Section 451(c) also codifies much of the treatment of advance payments under Rev. Proc. 2004-34 and permits the allocation of the transaction price to performance obligations if consistent with applicable financial statements.

Agency: Department of the Treasury(TREAS)  Priority: Other Significant 
RIN Status: Previously published in the Unified Agenda Agenda Stage of Rulemaking: Proposed Rule Stage 
Major: Undetermined  Unfunded Mandates: No 
EO 13771 Designation: Other 
CFR Citation: Not Yet Determined     (To search for a specific CFR, visit the Code of Federal Regulations.)
Legal Authority: 26 U.S.C. 7805(a)    26 U.S.C. 451(c) (revision)   
Legal Deadline:  None
Action Date FR Cite
NPRM  12/00/2018 
Additional Information: REG-104554-18 Drafter attorney: Peter E. Ford (202) 317-4878 Reviewer attorney: David M. Christensen (202) 317-4861 Treasury attorney: Christopher Call (202) 317-6865 CC:ITA
Regulatory Flexibility Analysis Required: No  Government Levels Affected: None 
Federalism: No 
Included in the Regulatory Plan: No 
RIN Data Printed in the FR: No 
Agency Contact:
Peter E. Ford
Department of the Treasury
Internal Revenue Service
1111 Constitution Avenue NW.,
Washington, DC 20224
Phone:202 317-4878
Fax:202 317-4883