Tax reform changes the cash method of accounting for some businesses.
Here’s how the rules changed. The law:
- Allows small business taxpayers with average annual gross receipts of $25 million or less in the prior three-year period to use the cash method of accounting.
- Exempts small business taxpayers from certain accounting rules for inventories, cost capitalization and long-term contracts.
- Allows more small business taxpayers to use this cash method after Dec. 31, 2017.