In 2017, Congress amended Section 451(b) of the tax code to
require accrual method taxpayers to include certain amounts in
income no later than the time those amounts are reflected on
applicable financial statements. On December 21, 2020, the IRS
issued final regulations under Section 451(b).
Like the proposed regulations, which we discussed here, the final regulations confirm that
Section 451(b) generally does not apply to amounts treated as
original issue discount or market discount for tax purposes, other
than certain credit card fees (which historically have been treated
as giving rise to or increasing original issue
discount).
Originally Published by Cadwalader, December 2020
