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).