§455 — Prepaid subscription income
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Statute Text — 26 U.S.C. §455
Prepaid subscription income to which this section applies shall be included in gross income for the taxable years during which the liability described in subsection (d)(2) exists.
In the case of any prepaid subscription income to which this section applies—
If the liability described in subsection (d)(2) ends, then so much of such income as was not includible in gross income under subsection (a) for preceding taxable years shall be included in gross income for the taxable year in which the liability ends.
If the taxpayer dies or ceases to exist, then so much of such income as was not includible in gross income under subsection (a) for preceding taxable years shall be included in gross income for the taxable year in which such death, or such cessation of existence, occurs.
This section shall apply to prepaid subscription income if and only if the taxpayer makes an election under this section with respect to the trade or business in connection with which such income is received. The election shall be made in such manner as the Secretary may by regulations prescribe. No election may be made with respect to a trade or business if in computing taxable income the cash receipts and disbursements method of accounting is used with respect to such trade or business.
An election made under this section shall apply to all prepaid subscription income received in connection with the trade or business with respect to which the taxpayer has made the election; except that the taxpayer may, to the extent permitted under regulations prescribed by the Secretary, include in gross income for the taxable year of receipt the entire amount of any prepaid subscription income if the liability from which it arose is to end within 12 months after the date of receipt. An election made under this section shall not apply to any prepaid subscription income received before the first taxable year for which the election is made.
A taxpayer may, with the consent of the Secretary, make an election under this section at any time.
A taxpayer may, without the consent of the Secretary, make an election under this section for his first taxable year in which he receives prepaid subscription income in the trade or business. Such election shall be made not later than the time prescribed by law for filing the return for the taxable year (including extensions thereof) with respect to which such election is made.
An election under this section shall be effective for the taxable year with respect to which it is first made and for all subsequent taxable years, unless the taxpayer secures the consent of the Secretary to the revocation of such election. For purposes of this title, the computation of taxable income under an election made under this section shall be treated as a method of accounting.
For purposes of this section—
The term “prepaid subscription income” means any amount (includible in gross income) which is received in connection with, and is directly attributable to, a liability which extends beyond the close of the taxable year in which such amount is received, and which is income from a subscription to a newspaper, magazine, or other periodical.
The term “liability” means a liability to furnish or deliver a newspaper, magazine, or other periodical.
Prepaid subscription income shall be treated as received during the taxable year for which it is includible in gross income under section 451 (without regard to this section).
Notwithstanding the provisions of this section, any taxpayer who has, for taxable years prior to the first taxable year to which this section applies, reported his income under an established and consistent method or practice of accounting for prepaid subscription income (to which this section would apply if an election were made) may continue to report his income for taxable years to which this title applies in accordance with such method or practice.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.455-1 Treatment of prepaid subscription income
- Treas. Reg. §Treas. Reg. §1.455-2 Scope of election under section 455
- Treas. Reg. §Treas. Reg. §1.455-2(a) If a taxpayer makes an election under section 455 and § 1.
- Treas. Reg. §Treas. Reg. §1.455-2(b) If the taxpayer is engaged in more than one trade or business in which a liability is incurred to furnish or deliver a newspaper, magazine, or other periodical, a separate election 455 with respect to each such trade or business.
- Treas. Reg. §Treas. Reg. §1.455-2(c) An election made under section 455 shall be binding for the first taxable year for which the election is made and for all subsequent taxable years, unless the taxpayer secures the consent of the Commissioner to the revocation of such election.
- Treas. Reg. §Treas. Reg. §1.455-2(d) An election made under section 455 shall not apply to any prepaid subscription income received before the first taxable year to which the election applies.
- Treas. Reg. §Treas. Reg. §1.455-2(e) No election may be made under section 455 with respect to a trade or business if, in computing taxable income, the cash receipts and disbursements method of accounting is used with respect to such trade or business.
- Treas. Reg. §Treas. Reg. §1.455-3 Method of allocation
- Treas. Reg. §Treas. Reg. §1.455-3(a) Prepaid subscription income to which section 455 applies shall be included in gross income for the taxable years during which the liability to which the income relates is discharged or is deemed to be discharged on the basis of the taxpayer's experience.
- Treas. Reg. §Treas. Reg. §1.455-3(b) For purposes of determining the period or periods over which the liability of the taxpayer extends, and for purposes of allocating prepaid subscription income to such periods, the taxpayer may aggregate similar transactions during the taxable year in any reasonable manner, provided the method of aggregation and allocation is consistently followed.
- Treas. Reg. §Treas. Reg. §1.455-4 Cessation of taxpayer's liability
- Treas. Reg. §Treas. Reg. §1.455-4(a) If a taxpayer has elected to apply the provisions of section 455 to a trade or business in connection with which prepaid subscription income is received, and if its liability to furnish or deliver a newspaper, magazine, or other periodical ends for any reason, then so much of the prepaid subscription income attributable to such liability as was not includible in its gross income under section 455 for preceding taxable years shall be included in its gross income for the taxable year in which such
- Treas. Reg. §Treas. Reg. §1.455-4(b) If a taxpayer who has elected to apply the provisions of section 455 to a trade or business dies or ceases to exist, then so much of the prepaid subscription income attributable to such trade or business which was not includible in its gross income under section 455 for preceding taxable years shall be included in its gross income for the taxable year in which such death or cessation of existence occurs.
- Treas. Reg. §Treas. Reg. §1.455-5 Definitions and other rules
- Treas. Reg. §Treas. Reg. §1.455-5(a) Prepaid subscription income.
- Treas. Reg. §Treas. Reg. §1.455-5(b) Liability.
- Treas. Reg. §Treas. Reg. §1.455-5(c) Receipt of prepaid subscription income.
- Treas. Reg. §Treas. Reg. §1.455-5(d) Treatment of prepaid subscription income under an established accounting method.
- Treas. Reg. §Treas. Reg. §1.455-6 Time and manner of making election
- Treas. Reg. §Treas. Reg. §1.455-6(a) Election without consent.
- Treas. Reg. §Treas. Reg. §1.455-6(b) Election with consent.
- Treas. Reg. §Treas. Reg. §1.455-6(c) §1.455-6(c)
- Treas. Reg. §Treas. Reg. §1.455-6(i) §1.455-6(i)
- Treas. Reg. §Treas. Reg. §1.455-6(v) §1.455-6(v)