The IRS will now automatically provide consent to small business taxpayer’s application to change to the cash method of accounting.
What do the automatic consent changes include?
- a change to the cash method of accounting
- an end to UNICAP for certain costs – this includes self-constructed assets
- certain changes to inventory items
- a change from the percentage-of-completion method for long-term construction contracts
- an end to UNICAP for home construction contracts
Who is considered a small business taxpayer?
Small business taxpayers are generally taxpayers with average annual gross earnings of $25 million or less in the prior three-year period.
When is this change effective?
The change generally applies to tax year beginning after 12/31/17. An exception is available for a fiscal year filer whose 2017 return may include exempt long-term contracts entered into after 12/31/17.