Acceleration of advance payments did not apply under the facts presented

Plain-English summary

The IRS reconsidered the second issue in Technical Advice Memorandum 200725029 concerning advance payments. The Service had previously agreed that the amounts were advance payments under Rev. Proc. 2004-34 but concluded that an acceleration provision required including them in the year received. After reconsideration, the IRS concluded that the acceleration provision did not apply on the facts presented. The memorandum directs that a copy be provided to the taxpayer.

Ruling snapshot

• Question: Did the acceleration provision for advance payments require inclusion of the amounts in the year received?
• Outcome: Advice given
• Key authorities: IRC § 451; Rev. Proc. 2004-34, §§ 4.01 and 5.02(5)(b)

Full text (IRS public release)

                        INTERNAL REVENUE SERVICE
              NATIONAL OFFICE TECHNICAL ADVICE MEMORANDUM

                                             June 28, 2010

                                                  Third Party Communication: None
                                                  Date of Communication: Not Applicable

Number: 201039024
Release Date: 10/1/2010
Index (UIL) No.: 451.13-01
CASE-MIS No.: TAM-122006-10

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     Taxpayer's Name:                             ---------------
     Taxpayer's Address:                          ----------------------------------------
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     Taxpayer's Identification No.:               ----------------
     Years Involved:                              ----------------------
     Date of Conference:                          ---------------------------

The conclusion reached in addressing the second issue in Technical Advice
Memorandum 200725029 has been reconsidered and is now revoked. With respect to
the second issue in the memorandum, the Service agreed with the taxpayer and
concluded that the amounts at issue are advance payments within the meaning of
section 4.01 of Rev. Proc. 2004-34, 2004-1 C.B. 991. However, the Service also
concluded that, because the taxpayer’s obligations with respect to the payments are
satisfied as the payments are received, the amounts must be included in the year of
receipt pursuant to the acceleration provision of section 5.02(5)(b) of Rev. Proc.
2004-34. After reconsideration, we now conclude that the acceleration provision does
not apply under the facts of this case.

A copy of this technical advice memorandum is to be given to the taxpayer. Section
6110(k)(3) of the Internal Revenue Code provides that it may not be used or cited as
precedent.