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Section 451 advance payment and method change guidance issued

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September 2019


The IRS and Treasury have released long-awaited proposed regulations implementing Sections 451(b) and 451(c), added by the 2017 tax reform act, and Rev. Proc. 2019-37, which provides procedures for a taxpayer to change its method of accounting to comply with the new rules.  The Section 451(b) proposed regulations are discussed in Proposed regulations interpret the all-events test under Section 451(b).  This Insight discusses the Section 451(c) proposed regulations and Rev. Proc. 2019-37.

PwC professionals will discuss the Section 451(c) proposed regulations and Rev. Proc. 2019-37 in a Tax Readiness series webcast on Tuesday, October 1, 2019, at 2 PM EDT.  Registration details for the webcast are available here.

The takeaway

The proposed regulations provide needed clarification of the Section 451(c) rules, which apply for tax years beginning in 2018.  Adopting many of the rules from Rev. Proc. 2004-34 and allowing taxpayers to continue using that method of accounting until final regulations are effective avoid the need to make multiple accounting method changes and reduce administrative burden.   However, until the proposed regulations are finalized and effective, taxpayers should carefully evaluate whether they want to follow Rev. Proc. 2004-34 or the proposed regulations.

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Christine Turgeon

Partner, Federal Tax Services Leader, PwC US

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