Under both the cash and accrual methods of accounting for tax purposes, a taxpayer may elect to defer prepaid revenue.

Question

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Under the accrual method, taxpayers can elect to defer the inclusion of income related to certain advance payments to the next tax year, but under the cash method, income is generally recognized when received, making deferral based on prepaid revenue not applicable in the same way.

Under Both the Cash and Accrual Methods of Accounting for Tax