The IRS has issued final regulations on the timing of income inclusion under an accrual method of accounting, including the treatment of advance payments for goods, services and certain other items.
The regulations (T.D. 9941) under Sec. 451(b) provide guidance regarding the applicable financial statement (AFS) income inclusion rule, under which taxpayers who use the accrual method and have an AFS must recognize income when meeting the all-events test or when including the item of income in revenue in their AFS.
The final regulations generally apply for tax years beginning on or after Jan. 1, 2021. However, certain rules for specified fees that are not specified credit card fees apply for tax years beginning on or after Jan. 6, 2022. Learn more.