Share with your friends

Final regulations: Advance payments for goods, long-term contracts

Final regulations: Advance payments for goods

The U.S. Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9870) that “streamline” existing regulations by removing rules that are no longer necessary after the enactment of the U.S. 2017 tax law (Pub. L. No. 115-97)—the law that is often referred to as the “Tax Cuts and Jobs Act.”


Related content

The final regulations [PDF 314 KB] adopt “without modification” regulations that were proposed in October 2018.

With the 2017 tax law changes, section 451(c) generally requires an accrual method taxpayer that receives any advance payment described in section 451(c)(4) during the tax year to include the advance payment in income in the tax year of receipt or make an election to: (1) include any portion of the advance payment in income in the tax year of receipt to the extent required under new section 451(b); and (2) include the remaining portion of the advance payment in income in the following tax year. Section 451(c) and its election to defer advance payments override the deferral method provided by Reg. section 1.451-5.

Accordingly, the final regulations remove Reg. section 1.451-5 (and its cross references), and thus allow for the new deferral rules of section 451(c) to apply uniformly and consistently to all taxpayers.

The final regulations are scheduled to be published in the Federal Register on July 15, 2019.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal