The American Institute of CPAs sent a
They related to the treatment of advance payments deferred under
The AICPA is recommending that additional guidance be issued to eliminate the current ambiguity in the existing rules. The AICPA also urged the IRS and the Treasury Department to issue guidance to clarify that the acquirer may continue to defer the recognition of income from advance payments under Rev. Proc. 2004-34 or Treas. Reg. 1.451-5 for federal income tax purposes, even though the amount of the deferred revenue obligation would be adjusted in a stock acquisition.
In addition, the AICPA suggested that the IRS issue guidance to clarify that advance payments from a related party (such as a controlled foreign corporation) whose financial results are included in the same worldwide financial statements are eligible for deferral under Rev. Proc. 2004-34 even though those advance payments are not recognized in the taxpayer’s financial statements.