advance payment
(A)The term “advance payment” means any payment— (i)the full inclusion of which in the gross income of the taxpayer for the taxable year of receipt is a permissible method of accounting under this section (determined without regard to this subsection), (ii)any portion of which is included in revenue by the taxpayer in a financial statement described in clause (i) or (ii) of subsection (b)(1)(A) for a subsequent taxable year, and (iii)which is for goods, services, or such other items as may be identified by the Secretary for purposes of this clause. (B)Except as otherwise provided by the Secretary, such term shall not include— (i)rent, (ii)insurance premiums governed by subchapter L, (iii)payments with respect to financial instruments, (iv)payments with respect to warranty or guarantee contracts under which a third party is the primary obligor, (v)payments subject to section 871(a), 881, 1441, or 1442, (vi)payments in property to whichapplies, and (vii)any other payment identified by the Secretary for purposes of this subparagraph. (C)For purposes of this subsection, an item of gross income is received by the taxpayer if it is actually or constructively received, or if it is due and payable to the taxpayer. (D)For purposes of this subsection, rules similar to subsection (b)(4) shall apply. (d)In the case of the death of a taxpayer whose taxable income is computed under an accrual method of accounting, any amount accrued only by reason of the death of the taxpayer shall not be included in computing taxable income for the period in which falls the date of the taxpayer’s death. (e)For purposes of subsection (a), tips included in a written statement furnished an employer by an employee pursuant toshall be deemed to be received at the time the written statement including such tips is furnished to the employer. (f)In the case of insurance proceeds received as a result of destruction or damage to crops, a taxpayer reporting on the cash receipts and disbursements method of accounting may elect to include such proceeds in income for the taxable year following the taxable year of destruction or damage, if he establishes that, under his practice, income from such crops would have been reported in a following taxable year. For purposes of the preceding sentence, payments received under the Agricultural Act of 1949, as amended, or title II of the Disaster Assistance Act of 1988, as a result of (1) destruction or damage to crops caused by drought, flood, or any other natural disaster, or (2) the inability to plant crops because of such a natural disaster shall be treated as insurance proceeds received as a result of destruction or damage to crops. An election under this subsection for any taxable year shall be made at such time and in such manner as the Secretary prescribes. (g)