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This regulation provides rules under section 451(c), which generally permits an accrual method taxpayer to defer advance payments for goods and services to the extent that the advance payment received is not recognized as revenue in an applicable financial statement in the year the payment is received. Any remaining portion of such advance payment is recognized in gross income in the taxable year following the taxable year in which such payment is received. Section 451(c) also codifies much of the treatment of advance payments under Rev. Proc. 2004-34 and permits the allocation of the transaction price to performance obligations if consistent with applicable financial statements.