One of the more common mistakes we see in the preparation of business tax returns is the treatment of “deferred revenue” for tax purposes. While deferred revenue is common for GAAP purposes, unless you can hang your hat on an authority, the deferral of revenue for tax purposes is generally not allowable.
What follows is a discussion regarding the most heavily utilized of those authorites: Revnue Procedure 2004-34. RP 2004-34 provides, on a limited basis, the ability for an accrual basis taxpayer to defer the recognition of income related to the receipt of an advanced payment to provide goods, services, or a mixture of goods or services in the future. Enjoy.