CH. 1—NORMAL TAXES AND SURTAXES
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liability described in subsection (e)(2) is (at the time the income is received) to end after the close of the fifth taxable year after the taxable year in which such income is received, then— (1) one-sixth of the prepaid income shall be included in gross income for the taxable year in which received, and one-sixth shall be included in gross income for each of the 5 succeeding taxable years; except that (2) with the consent of the Secretary or his delegate, the prepaid income shall be included in gross income in such proportions, and for such taxable years, as are specified in such consent. (c) W H E R E TAXPAYER'S LIABILITY C E A S E S. — I n the case of any prepaid income to which this section applies— (1) If the liability described in subsection (e)(2) ends, then so much of such income as was not includible in gross income under subsections (a) and (b) for preceding taxable years shall be included in gross income for the taxable year in which the liability ends. (2) If the taxpayer dies or ceases to exist, then so much of such income as was not includible in gross income under subsections (a) and (b) for preceding taxable years shall be included m gross income for the taxable year in which such death, or such cessation of existence, occurs. (d) P R E P A I D INCOME TO W H I C H T H I S SECTION A P P L I E S. — (1) ELECTION OF BENEFITS.—This section shall apply to
prepaid 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 or his delegate 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. (2) SCOPE OF ELECTION.—An election made under this section shall apply to all prepaid 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 or his delegate, include in gross income for the taxable year of receipt the entire amount of any prepaid 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 income received before the first taxable year for which the election is.made. (3)
W H E N ELECTION MAY BE MADE.—
(A) W I T H O U T CONSENT.—A taxpayer may, without the consent of the Secretary or his delegate, make an election under this section for his first taxable year (i) which begins after December 31, 1953, and ends after the date on which this title is enacted, and (ii) in which he receives prepaid income in the trade or business. Such an election shall be made not later than the time prescribed by this subtitle for filing the return for such year (including extensions thereof). (B) W I T H CONSENT.—A taxpayer may, with the consent of the Secretary or his delegate, make an election under this section at any time. § 452(d)(3)(B) 49012°—54
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