- 15 - To qualify under sec. 1.451-5(c), Income Tax Regs., for deferral of income on an agreement to provide goods, the taxpayer must (1) account for advance payments pursuant to a method described in paragraph (b)(1)(ii) of this section for tax purposes, (2) receive substantial advance payments with respect to such agreement, and (3) have on hand or have available in that year through the taxpayer’s normal source of supply the kind and quantity of goods needed to satisfy the agreement in such year. Petitioners contend they received layaway deposits in 1995, and that, under section 1.451-5(c)(1)(i)(c), Income Tax Regs., that amount is not income in 1995. We disagree. Petitioners offered no evidence showing the amount of payments they received in 1995 for layaway sales was not completed in that year. We have no basis on which to estimate the amount of those payments. Petitioners have not shown they qualify for deferral of income under section 1.451-5(a), Income Tax Regs. Advance payments4 may be included in income not later than the second year following the year of receipt of these payments if, among 4 To qualify as an advanced payment for goods, (1) the payment must be an amount received pursuant to an agreement for sale or other disposition in the future of goods, (2) the payment must be applied against such agreement, and (3) the goods which are the subject of the agreement must be held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer’s trade or business. Sec. 1.451-5(a)(1), Income Tax Regs.Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
Last modified: May 25, 2011