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The IRS specifies this rule in Revenue Proceeding 2004-34, where it states that "qualifying taxpayers generally may defer to the next succeeding taxable year the inclusion in gross income for federal income tax purposes of advance payments (as defined in section 4 of this revenue procedure) to the extent the advance payments are not recognized in revenues (or, in certain cases, are not earned) in the taxable year of receipt" (irs...
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This method of deferring taxes is again based on the "wherewithal-to-pay" concept.
Another widely used method to defer taxes is through employer-sponsored retirement plans such as Roth IRA's or 401K plans. Individuals who are enrolled in these plans are able to defer paying income taxes until the funds are withdrawn, typically after retirement...
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