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C. Whether Petitioner May Defer Reporting of Deposits Under
Section 1.451-5, Income Tax Regs.
1. Relief Provisions for Accrual Basis Taxpayers
In 1971, the Commissioner issued Rev. Proc. 71-21, 1971-2
C.B. 549, relating to accrual basis taxpayers that receive
advance payments for services, Rev. Proc. 71-21, sec. 1, and the
Secretary issued section 1.451-5, Income Tax Regs., relating to
accrual basis taxpayers that receive advance payments for the
sale of property which they build, construct, install, or
manufacture. Section 1.451-5, Income Tax Regs., provides relief
from Schlude v. Commissioner, supra; American Auto. Association
v. United States, supra; Automobile Club of Michigan v.
Commissioner, 353 U.S. 180 (1957); and Hagen Adver. Displays,
Inc. v. Commissioner, 407 F.2d 1105 (6th Cir. 1969), affg. 47
T.C. 139 (1966).
2. Section 1.451-5, Income Tax Regs.
Petitioner contends that Eagle properly treated some of its
customer deposits as advance payments under section 1.451-5,
Income Tax Regs.
Under section 1.451-5, Income Tax Regs., accrual basis
taxpayers that receive advance payments (e.g., customer deposits)
in one taxable year may, in certain circumstances, defer
reporting the payments in gross income.6 An advance payment is a
6 Sec. 1.451-5, Income Tax Regs., was adopted Mar. 23, 1971.
T.D. 7103, 1971-1 C.B. 138. The regulation was promulgated in
(continued...)
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