RIP Funeral Home, Inc. RIP your client, is an accrual basis taxpayer that sells
preneed funeral contracts. Under these contracts, the customer pays in advance for goods and services
to be provided at the contract beneficiarys death. These payments are refundable at the contract
purchasers request, pursuant to state law, anytime until the goods and services are furnished. RIP,
consistent with its financial accounting reporting, includes the payments in income for the year the
funeral service is provided. The IRS agent insists that the payments be prepaid income subject to tax in
the year of receipt. Your client believes that the amounts involved are customer deposits. Write a letter
to RIP that contains your advice about how the issue should be resolved. Please submit your client
letter addressed to RIP Funeral Home, Inc. The clients address is Hollywood Blvd Beverly
Hills, CA
