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.

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