SECTION 4. DEFINITIONS

The following definitions apply solely for purposes of this revenue procedure —

.01 Advance Payment . Except as provided in section 4.02 of this revenue procedure, a payment received by a taxpayer is an “advance payment” if —

(1) including the payment in gross income for the taxable year of receipt is a permissible method of accounting for federal income tax purposes (without regard to this revenue procedure);

(2) the payment is recognized by the taxpayer (in whole or in part) in revenues in its applicable financial statement (as defined in section 4.06 of this revenue procedure) for a subsequent taxable year (or, for taxpayers without an applicable financial statement as defined in section 4.06 of this revenue procedure, the payment is earned by the taxpayer (in whole or in part) in a subsequent taxable year); and

(3) the payment is for —

(a) services; (b) the sale of goods (other than for the sale of goods for which the taxpayer uses a method of deferral provided in § 1.451–5(b)(1)(ii));

(c) the use (including by license or lease) of intellectual property as defined in section 4.03 of this revenue procedure;

26 CFR 601.204: Changes in accounting periods and in methods of accounting. (Also Part I, sections 446, 451; 1.446–1, 1.451–1.)

Rev. Proc. 2004–34