Max W Posted January 30, 2015 Report Share Posted January 30, 2015 This is a new client that hasn't filed 1120 for 4 years, 2010-2013. The 2009 copy that I received has a statement re 1-451-5 (d). The financials and 2009 return do not indicate how the advance payments are arrived at. The payments in the statement are broken into 3 categories; 1. Advance pmts rec'd in taxable year, $600K.; 2. Advance pmts rec'd in prior taxable years not included in income before current taxable year $100K; 3. Advance pmts rec'd in prior years included in inccome in current taxable year $25K. The business is luxury yacht sales. I would assume that a spread sheet or some cumulative record of each sale would be kept showing when the advance payments become taxable income. I would appreciate any input on this. Quote Link to comment Share on other sites More sharing options...
Elrod Posted January 30, 2015 Report Share Posted January 30, 2015 Max, Your assumption would be correct. They need to produce their records for each year, and 2009's records could also assist you in completion. This may also help you............. http://www.irs.gov/irb/2004-22_IRB/ar17.html Good luck. 1 Quote Link to comment Share on other sites More sharing options...
Max W Posted January 30, 2015 Author Report Share Posted January 30, 2015 Elrod, thanks for your help. The regs, use a phrase, "inventoriable costs and expenditures". Is this just an IRS lawyer's way of saying cost basis? If that is the case, then I think I understand the basic procedure. Once that cost figure is reached, there are two additional years to report the advance payments as a sale. Quote Link to comment Share on other sites More sharing options...
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