### Question
How is the term advance payment defined?


### Answer
The term **advance payment** is defined in *26 U.S.C. § 451* as the following:

> any payment—


(i) the full inclusion of which in the gross income of the taxpayer for the taxable year of receipt is a permissible method of accounting under this section (determined without regard to this subsection),


(ii) any portion of which is included in revenue by the taxpayer in a financial statement described in clause (i) or (ii) of subsection (b)(1)(A) for a subsequent taxable year, and


(iii) which is for goods, services, or such other items as may be identified by the Secretary for purposes of this clause

#### Citation:
  - *26 U.S.C. § 451*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter E-Accounting Periods and Methods of Accounting > PART II-METHODS OF ACCOUNTING > Subpart B-Taxable Year for Which Items of Gross Income Included**

