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the inclusion in gross income for Federal income tax
purposes of payments received (or amounts due and
payable) in one taxable year for services to be
performed by the end of the next succeeding taxable
year. * * *
Rev. Proc. 70-21, sec. 1. The following year, respondent issued
Rev. Proc. 71-21, 1971-2 C.B. 549, which superseded Rev. Proc.
70-21, but incorporated the basic principles of the earlier
revenue procedure. Rev. Proc. 71-21, sec. 2, states:
In general, tax accounting requires that payments
received for services to be performed in the future
must be included in gross income in the taxable year of
receipt. However, this treatment varies from financial
accounting conventions consistently used by many
accrual method taxpayers in the treatment of payments
received in one taxable year for services to be
performed by them in the next succeeding taxable year.
The purpose of this Revenue Procedure is to reconcile
the tax and financial accounting treatment of such
payments in a large proportion of these cases without
permitting extended deferral in the time of including
such payments in gross income for Federal income tax
purposes. Such reconciliation will facilitate
reporting and verification of such items from the
standpoint of both the taxpayers affected and the
Internal Revenue Service. * * * [Emphasis added.]
Rev. Proc. 71-21, sec. 3.02, further provides that:
An accrual method taxpayer who, pursuant to an
agreement (written or otherwise), receives a payment in
one taxable year for services, where all of the
services under such agreement are required by the
agreement as it exists at the end of the taxable year
of receipt to be performed by him before the end of the
next succeeding taxable year, may include such payment
in gross income as earned through the performance of
the services * * *
The amount of the advance payment includable as gross receipts in
gross income in the taxable year of receipt must be no less than
the amount of such payments included for purposes of the
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