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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Tax Law

Date & Time
  • event Date

    Tuesday, June 1, 2021

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$347.00
CLE
CPE
ALL

This CLE/CPE course will provide tax professionals and advisers a detailed analysis of IRS final regulations and new rules under Sections 451(b) and 451(c) for the timing of income recognition and advance payments. The panel will discuss the challenges and opportunities for taxpayers under the final regulations, the all-events test for recognizing gross income, using a deferral method of accounting for advance payments, cost offset methods, and issues stemming from multi-year contracts and contracts with multiple performance obligations.

Faculty

Ellen McElroy
Partner
Eversheds Sutherland (US) LLP.

Ms. McElroy works on a broad variety of taxpayer issues involving both accounting methods and inventories. She has worked on accounting methods for large corporate clients, and with the IRS Office of Special Counsel (Legislation). She chairs the ABA Tax Accounting Committee and previously chaired its Capitalization Subcommittee.

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Michael D. Resnick
Attorney
Eversheds Sutherland (US) LLP.

Mr. Resnick focuses his practice on federal taxation matters, including tax accounting methods and compliance, planning, and controversy issues. He regularly counsels clients on the proper tax treatment of costs associated with tangible property, intangible property and corporate transaction costs. He also counsels on tax restructurings and the regulation and taxation of tax-exempt organizations.

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Description

IRS final regulations under Section 451(b) and (c) alter the standard for income recognition and codify an accounting method allowing income deferral for advance payments. The final regulations clarify certain items for taxpayers but fail to define realization, explain cost offset concerning the applicable financial statement (AFS) income inclusion rule, and other key issues.

Section 451(b) requires recognition of income no later than when included in an AFS for accrual-basis taxpayers. The final regs cover handling businesses with an AFS, cost-of-goods sold offsets, differences between taxable year-end dates and financial reporting year-end dates, and other income recognition timing rules.

Under the 2017 tax reform, Section 451(c) codifies that an accrual method taxpayer may use the deferral accounting method for advance payments. This allows a taxpayer to elect to recognize income from an advance payment in the year of receipt to the extent revenue is recognized in an AFS and recognize the remaining amount in the next taxable year.

The final regulations present new opportunities and challenges for taxpayers. Tax practitioners must consider methods to delay income recognition in light of the new rules, identify issues in contracts to allocate transaction prices, and overcome challenges for the inventory cost offset method.

Listen as our panel of experts explains key considerations under this new income recognition and advance payments rules, issues stemming from multi-year contracts and contracts with multiple performance obligations, how to defer revenue inclusion, and best practices for implementing these new standards.

Outline

  1. Overview of income recognition rules
  2. Impact of final regulations
  3. Timing and income recognition under 451(b)
  4. Advance payments under 451(c)
  5. Changes in accounting method
  6. Best practices

Benefits

The panel will review these and other critical issues:

  • What are the key provisions of the final Section 451 regulations?
  • What is an applicable financial statement?
  • What businesses are impacted by 451(b)?
  • What are the challenges under 451(c)?
  • What issues arise from multi-year contracts and contracts with multiple performance obligations?
  • What is a special method of accounting?
  • Which companies qualify for the streamlined method change?
  • How do accrual-basis businesses avoid income inclusion under 451(b)?

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Identify applicable financial statements
  • Ascertain what methods are special accounting methods
  • Decide when Form 3115, Application for Change of Accounting Method, should be filed
  • Determine the impact of new IRS final Section 451(b) and 451(c) on income recognition and advance payments

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).