- Publication 538 - Introductory Material
- Publication 538 - Main Content
- Accounting Periods
- Calendar Year
- Fiscal Year
- Short Tax Year
- Not in Existence Entire Year
- Figuring Tax for Short Year
- Improper Tax Year
- Change in Tax Year
- Partnerships, S Corporations, and Personal Service Corporations (PSCs)
- S Corporation
- Personal Service Corporation (PSC)
- Section 444 Election
- Deferral period.
- Retaining tax year.
- Adopting or changing tax year.
- Making the election.
- Terminating the election.
- Required payment for partnership or S corporation.
- Applicable election year.
- Required distribution for PSC.
- Back-up election.
- Making back-up election.
- Activating election.
- 52-53-Week Tax Year
- Business Purpose Tax Year
- Corporations (Other Than S Corporations and PSCs)
- Accounting Methods
- Methods you can use.
- Special methods.
- Hybrid method.
- Business and personal items.
- Two or more businesses.
- Cash Method
- Excluded Entities
- Accrual Method
- Advance Payment for Services
- Advance Payment for Sales
- How to report payments.
- Alternative method of reporting.
- Information schedule.
- Exception for inventory goods.
- Substantial advance payments.
- IRS approval.
- Economic Performance
- Workers' compensation and tort liability.
- Other liabilities.
- Compensation for services.
- Vacation pay.
- Exception for recurring items.
- Amended return.
- Recurrence and consistency.
- Matching expenses with income.
- Expenses Paid in Advance
- Related Persons
- Qualifying taxpayer.
- Gross receipts test for qualifying taxpayers.
- Qualifying small business taxpayer.
- Gross receipts test for qualifying small business taxpayers.
- Eligible business.
- Gross receipts.
- Business not owned or not in existence for 3 years.
- Materials and supplies that are not incidental.
- Changing accounting methods.
- Items Included in Inventory
- Identifying Cost
- Specific Identification Method
- FIFO Method
- LIFO Method
- Differences Between FIFO and LIFO
- Valuing Inventory
- Cost Method
- Lower of Cost or Market Method
- Retail Method
- Closing inventory.
- Markup percentage.
- Retail method with LIFO.
- Price index.
- Retail method without LIFO.
- Figuring income tax.
- Perpetual or Book Inventory
- Loss of Inventory
- Uniform Capitalization Rules
- Change in Accounting Method
- How To Get Tax Help
- Preparing and filing your tax return.
- Getting tax forms and publications.
- Using direct deposit.
- Delayed refund for returns claiming certain credits.
- Getting a transcript or copy of a return.
- Using online tools to help prepare your return.
- Resolving tax-related identity theft issues.
- Checking on the status of your refund.
- Making a tax payment.
- What if I cant pay now?
- Checking the status of an amended return.
- Understanding an IRS notice or letter.
- Contacting your local IRS office.
- Watching IRS videos.
- Getting tax information in other languages.
- The Taxpayer Advocate Service Is Here To Help You
- What is the Taxpayer Advocate Service?
- What Can the Taxpayer Advocate Service Do For You?
- How Can You Reach Us?
- How Can You Learn About Your Taxpayer Rights?
- How Else Does the Taxpayer Advocate Service Help Taxpayers?
- Low Income Taxpayer Clinics
- Publication 538 - Additional Material
The IRS has created a page on IRS.gov for information about Publication 538, at www.irs.gov/pub538. Information about recent developments affecting Publication 538 will be posted on that page.
Every taxpayer (individuals, business entities, etc.) must figure taxable income for an annual accounting period called a tax year. The calendar year is the most common tax year. Other tax years include a fiscal year and a short tax year.
Each taxpayer must use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and the accrual method.
Under the cash method, you generally report income in the tax year you receive it, and deduct expenses in the tax year in which you pay the expenses.
Under the accrual method, you generally report income in the tax year you earn it, regardless of when payment is received. You deduct expenses in the tax year you incur them, regardless of when payment is made.
This publication explains some of the rules for accounting periods and accounting methods. In some cases, you may have to refer to other sources for a more in-depth explanation of the topic.
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537 Installment Sales
Form (and Instructions)
1128 Application To Adopt, Change, or Retain a Tax Year
2553 Election by a Small Business Corporation
3115 Application for Change in Accounting Method
8716 Election To Have a Tax Year Other Than a Required Tax Year
See Ordering forms and publications, earlier for information about getting these publications and forms.
You must use a tax year to figure your taxable income. A tax year is an annual accounting period for keeping records and reporting income and expenses. An annual accounting period does not include a short tax year (discussed later). You can use the following tax years:
A calendar year; or
A fiscal year (including a 52-53-week tax year).
Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. You cannot adopt a tax year by merely:
Filing an application for an extension of time to file an income tax return;
Filing an application for an employer identification number (Form SS-4); or
Paying estimated taxes.
This section discusses:
A calendar year.
A fiscal year (including a period of 52 or 53 weeks).
A short tax year.
An improper tax year.
A change in tax year.
Special situations that apply to individuals.
Restrictions that apply to the accounting period of a partnership, S corporation, or personal service corporation.
Special situations that apply to corporations.
A calendar year is 12 consecutive months beginning on January 1st and ending on December 31st.
If you adopt the calendar year, you must maintain your books and records and report your income and expenses from January 1st through December 31st of each year.
If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you obtain approval from the IRS to change it, or are otherwise allowed to change it without IRS approval. See Change in Tax Year, later.
Generally, anyone can adopt the calendar year. However, you must adopt the calendar year if:
You keep no books or records;
You have no annual accounting period;
Your present tax year does not qualify as a fiscal year; or
You are required to use a calendar year by a provision in the Internal Revenue Code or Income Tax Regulations.
A fiscal year is 12 consecutive months ending on the last day of any month except December 31st. If you are allowed to adopt a fiscal year, you must consistently maintain your books and records and report your income and expenses using the time period adopted.
You can elect to use a 52-53-week tax year if you keep your books and records and report your income and expenses on that basis. If you make this election, your 52-53-week tax year must always end on the same day of the week. Your 52-53-week tax year must always end on:
Whatever date this same day of the week last occurs in a calendar month, or
Whatever date this same day of the week falls that is nearest to the last day of the calendar month.
A short tax year is a tax year of less than 12 months. A short period tax return may be required when you (as a taxable entity):
Are not in existence for an entire tax year, or
Change your accounting period.
Tax on a short period tax return is figured differently for each situation.
Even if a taxable entity was not in existence for the entire year, a tax return is required for the time it was in existence. Requirements for filing the return and figuring the tax are generally the same as the requirements for a return for a full tax year (12 months) ending on the last day of the short tax year.
XYZ Corporation was organized on July 1. It elected the calendar year as its tax year. The corporation’s first tax return will cover the short period from July 1 through December 31.
A calendar year corporation dissolved on July 23. The corporation’s final return will cover the short period from January 1 through July 23.
If the IRS approves a change in your tax year or if you are required to change your tax year, you must figure the tax and file your return for the short tax period. The short tax period begins on the first day after the close of your old tax year and ends on the day before the first day of your new tax year.
Figure tax for a short year under the general rule, explained below. You may then be able to use a relief procedure, explained later, and claim a refund of part of the tax you paid.
Taxpayers that have adopted an improper tax year must change to a proper tax year. For example, if a taxpayer began business on March 15 and adopted a tax year ending on March 14 (a period of exactly 12 months), this would be an improper tax year. See Accounting Periods, earlier, for a description of permissible tax years.
To change to a proper tax year, you must do one of the following.
If you are requesting a change to a calendar tax year, file an amended income tax return based on a calendar tax year that corrects the most recently filed tax return that was filed on the basis of an improper tax year. Attach a completed Form 1128 to the amended tax return. Write "FILED UNDER REV. PROC. 85-15" at the top of Form 1128 and file the forms with the Internal Revenue Service Center where you filed your original return.
If you are requesting a change to a fiscal tax year, file Form 1128 in accordance with the form instructions to request IRS approval for the change.
Generally, you must file Form 1128 to request IRS approval to change your tax year. See the Instructions for Form 1128 for exceptions. If you qualify for an automatic approval request, a user fee is not required.
Generally, individuals must adopt the calendar year as their tax year. An individual can adopt a fiscal year if the individual maintains his or her books and records on the basis of the adopted fiscal year.
Generally, partnerships, S corporations (including electing S corporations), and PSCs must use a required tax year. A required tax year is a tax year that is required under the Internal Revenue Code and Income Tax Regulations. The entity does not have to use the required tax year if it receives IRS approval to use another permitted tax year or makes an election under section 444 of the Internal Revenue Code (discussed later). The following discussions provide the rules for partnerships, S corporations, and PSCs.
A partnership must conform its tax year to its partners' tax years unless any of the following apply.
The partnership makes an election under section 444 of the Internal Revenue Code to have a tax year other than a required tax year by filing Form 8716.
The partnership elects to use a 52-53-week tax year that ends with reference to either its required tax year or a tax year elected under section 444.
The partnership can establish a business purpose for a different tax year.
The rules for the required tax year for partnerships are as follows.
If one or more partners having the same tax year own a majority interest (more than 50%) in partnership profits and capital, the partnership must use the tax year of those partners.
If there is no majority interest tax year, the partnership must use the tax year of all its principal partners. A principal partner is one who has a 5% or more interest in the profits or capital of the partnership.
If there is no majority interest tax year and the principal partners do not have the same tax year, the partnership generally must use a tax year that results in the least aggregate deferral of income to the partners.
If a partnership changes to a required tax year because of these rules, it can get automatic approval by filing Form 1128.
All S corporations, regardless of when they became an S corporation, must use a permitted tax year. A permitted tax year is any of the following.
The calendar year.
A tax year elected under section 444 of the Internal Revenue Code. See Section 444 Election, below for details.
A 52-53-week tax year ending with reference to the calendar year or a tax year elected under section 444.
Any other tax year for which the corporation establishes a business purpose.
If an electing S corporation wishes to adopt a tax year other than a calendar year, it must request IRS approval using Form 2553, instead of filing Form 1128. For information about changing an S corporation's tax year and information about ruling requests, see the Instructions for Form 1128.
A PSC must use a calendar tax year unless any of the following apply.
The corporation makes an election under section 444 of the Internal Revenue Code. See Section 444 Election, below for details.
The corporation elects to use a 52-53-week tax year ending with reference to the calendar year or a tax year elected under section 444.
The corporation establishes a business purpose for a fiscal year.
See the Instructions for Form 1120 for general information about PSCs. For information on adopting or changing tax years for PSCs and information about ruling requests, see the Instructions for Form 1128.
A partnership, S corporation, electing S corporation, or PSC can elect under section 444 of the Internal Revenue Code to use a tax year other than its required tax year. Certain restrictions apply to the election. A partnership or an S corporation that makes a section 444 election must make certain required payments and a PSC must make certain distributions (discussed later). The section 444 election does not apply to any partnership, S corporation, or PSC that establishes a business purpose for a different period, explained later.
A partnership, S corporation, or PSC can make a section 444 election if it meets all the following requirements.
It is not a member of a tiered structure (defined in section 1.444-2T of the regulations).
It has not previously had a section 444 election in effect.
It elects a year that meets the deferral period requirement.
A partnership, S corporation, or PSC can use a tax year other than its required tax year if it elects a 52-53-week tax year (discussed earlier) that ends with reference to either its required tax year or a tax year elected under section 444 (discussed earlier).
A newly formed partnership, S corporation, or PSC can adopt a 52-53-week tax year ending with reference to either its required tax year or a tax year elected under section 444 without IRS approval. However, if the entity wishes to change to a 52-53-week tax year or change from a 52-53-week tax year that references a particular month to a non-52-53-week tax year that ends on the last day of that month, it must request IRS approval by filing Form 1128.
A new corporation establishes its tax year when it files its first tax return. A newly reactivated corporation that has been inactive for a number of years is treated as a new taxpayer for the purpose of adopting a tax year. An S corporation or a PSC must use the required tax year rules, discussed earlier, to establish a tax year. Generally, a corporation that wants to change its tax year must obtain approval from the IRS under either the: (a) automatic approval procedures; or (b) ruling request procedures. See the Instructions for Form 1128 for details.
An accounting method is a set of rules used to determine when and how income and expenses are reported on your tax return. Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item.
You choose an accounting method when you file your first tax return. If you later want to change your accounting method, you must get IRS approval. See Change in Accounting Method, later.
No single accounting method is required of all taxpayers. You must use a system that clearly reflects your income and expenses and you must maintain records that will enable you to file a correct return. In addition to your permanent accounting books, you must keep any other records necessary to support the entries on your books and tax returns.
You must use the same accounting method from year to year. An accounting method clearly reflects income only if all items of gross income and expenses are treated the same from year to year.
If you do not regularly use an accounting method that clearly reflects your income, your income will be refigured under the method that, in the opinion of the IRS, does clearly reflect income.
Most individuals and many small businesses use the cash method of accounting. Generally, if you produce, purchase, or sell merchandise, you must keep an inventory and use an accrual method for sales and purchases of merchandise. See Inventories, later, for exceptions to this rule.
Under the cash method, you include in your gross income all items of income you actually or constructively receive during the tax year. If you receive property and services, you must include their fair market value (FMV) in income.
You cannot hold checks or postpone taking possession of similar property from one tax year to another to postpone paying tax on the income. You must report the income in the year the property is received or made available to you without restriction.
Under the cash method, generally, you deduct expenses in the tax year in which you actually pay them. This includes business expenses for which you contest liability. However, you may not be able to deduct an expense paid in advance. Instead, you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules.
The following entities cannot use the cash method, including any combination of methods that includes the cash method. (See Special rules for farming businesses, later.)
A corporation (other than an S corporation) with average annual gross receipts exceeding $5 million. See Gross receipts test, below.
A partnership with a corporation (other than an S corporation) as a partner, and with the partnership having average annual gross receipts exceeding $5 million. See Gross receipts test, below.
A tax shelter.
Under an accrual method of accounting, you generally report income in the year it is earned and deduct or capitalize expenses in the year incurred. The purpose of an accrual method of accounting is to match income and expenses in the correct year.
Generally, you include an amount in gross income for the tax year in which all events that fix your right to receive the income have occurred and you can determine the amount with reasonable accuracy. Under this rule, you report an amount in your gross income on the earliest of the following dates.
When you receive payment.
When the income amount is due to you.
When you earn the income.
When title passes.
Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. However, if you receive advance payments for certain services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. However, you cannot postpone including any payment beyond that tax year. For a list of services and certain non-services that qualify for the deferral, see Revenue Procedure 2004-34, 2004-22, I.R.B. 991 (or any successor).
Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods held primarily for sale to customers in the ordinary course of your trade or business. However, the rules do not apply to a payment (or part of a payment) for services that are not an integral part of the main activities covered under the agreement. An agreement includes a gift certificate that can be redeemed for goods. Amounts due and payable are considered received.
Special rules apply to the deferral of advance payments from the sale of certain gift cards. See Revenue Procedure 2011-18, 2011-5 I.R.B. 443, as modified and clarified by Revenue Procedure 2013-29, 2013-33 I.R.B. 141 (or any successor).
Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply.
The all-events test has been met. The test is met when:
All events have occurred that fix the fact of liability, and
The liability can be determined with reasonable accuracy.
Economic performance has occurred.
Generally, you cannot deduct or capitalize a business expense until economic performance occurs. If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or the property is used. If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services.
You are a calendar year taxpayer. You buy office supplies in December 2016. You receive the supplies and the bill in December, but you pay the bill in January 2017. You can deduct the expense in 2016 because all events have occurred to fix the liability, the amount of the liability can be determined, and economic performance occurred in 2016.
Your office supplies may qualify as a recurring item, discussed later. If so, you can deduct them in 2016, even if the supplies are not delivered until 2017 (when economic performance occurs).
An expense you pay in advance is deductible only in the year to which it applies, unless the expense qualifies for the 12-month rule. Under the 12-month rule, a taxpayer is not required to capitalize amounts paid to create certain rights or benefits for the taxpayer that do not extend beyond the earlier of the following.
12 months after the right or benefit begins, or
The end of the tax year after the tax year in which payment is made.
If you have not been applying the general rule (an expense paid in advance is deductible only in the year to which it applies) and/or the 12-month rule to the expenses you paid in advance, you must get IRS approval before using the general rule and/or the 12-month rule. See Change in Accounting Method, later, for information on how to get IRS approval. See Expense paid in advance under Cash Method, earlier, for examples illustrating the application of the general and 12-month rules.
Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. See section 267 of the Internal Revenue Code and Pub. 542, Corporations, for the definition of related person.
An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. If you must account for an inventory in your business, you must use an accrual method of accounting for your purchases and sales. However, see Exceptions, next. See also Accrual Method, earlier.
To figure taxable income, you must value your inventory at the beginning and end of each tax year. To determine the value, you need a method for identifying the items in your inventory and a method for valuing these items. See Identifying Cost and Valuing Inventory, later.
The rules for valuing inventory are not the same for all businesses. The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Your inventory practices must be consistent from year to year.
The rules discussed here apply only if they do not conflict with the uniform capitalization rules of section 263A and the mark-to-market rules of section 475.
The following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later).
A qualifying taxpayer under Revenue Procedure 2001-10 on page 272 of Internal Revenue Bulletin 2001-2, available at www.irs.gov/pub/irs-irbs/irb01–02.pdf.
A qualifying small business taxpayer under Revenue Procedure 2002-28, on page 815 of Internal Revenue Bulletin 2002-18, available at www.irs.gov/pub/irs-irbs/irb02–18.pdf.
In addition to the information provided in this publication, you should see the revenue procedures referenced in the list, above, and the instructions for Form 3115 for information you will need to adopt or change to these accounting methods (see Changing methods, later).
Revenue Procedure 2002-28 does not apply to a farming business of a qualifying small business taxpayer. A taxpayer engaged in the trade or business of farming generally is allowed to use the cash method for any farming business. See Special rules for farming businesses under Cash Method, earlier.
Your inventory should include all of the following.
Merchandise or stock in trade.
Work in process.
Supplies that physically become a part of the item intended for sale.
Special rules apply to the cost of inventory or property imported from a related person. See the regulations under section 1059A of the Internal Revenue Code.
You can use any of the following methods to identify the cost of items in inventory.
Use the specific identification method when you can identify and match the actual cost to the items in inventory.
Use the FIFO or LIFO method, explained next, if:
You cannot specifically identify items with their costs.
The same type of goods are intermingled in your inventory and they cannot be identified with specific invoices.
The FIFO (first-in first-out) method assumes the items you purchased or produced first are the first items you sold, consumed, or otherwise disposed of. The items in inventory at the end of the tax year are matched with the costs of similar items that you most recently purchased or produced.
The LIFO (last-in first-out) method assumes the items of inventory you purchased or produced last are the first items you sold, consumed, or otherwise disposed of. Items included in closing inventory are considered to be from the opening inventory in the order of acquisition and from those acquired during the tax year.
Each method produces different income results, depending on the trend of price levels at the time. In times of inflation, when prices are rising, LIFO will produce a larger cost of goods sold and a lower closing inventory. Under FIFO, the cost of goods sold will be lower and the closing inventory will be higher. However, in times of falling prices, the opposite will hold.
The value of your inventory is a major factor in figuring your taxable income. The method you use to value the inventory is very important.
The following methods, described below, are those generally available for valuing inventory.
Lower of cost or market.
To properly value your inventory at cost, you must include all direct and indirect costs associated with it. The following rules apply.
For merchandise on hand at the beginning of the tax year, cost means the ending inventory price of the goods.
For merchandise purchased during the year, cost means the invoice price minus appropriate discounts plus transportation or other charges incurred in acquiring the goods. It can also include other costs that have to be capitalized under the uniform capitalization rules of section 263A of the Internal Revenue Code.
For merchandise produced during the year, cost means all direct and indirect costs that have to be capitalized under the uniform capitalization rules.
Under the lower of cost or market method, compare the market value of each item on hand on the inventory date with its cost and use the lower of the two as its inventory value.
This method applies to the following.
Goods purchased and on hand.
The basic elements of cost (direct materials, direct labor, and certain indirect costs) of goods being manufactured and finished goods on hand.
This method does not apply to the following. They must be inventoried at cost.
Goods on hand or being manufactured for delivery at a fixed price on a firm sales contract (that is, not legally subject to cancellation by either you or the buyer).
Goods accounted for under the LIFO method.
Under the lower of cost or market method, the following items would be valued at $600 in closing inventory.
You must value each item in the inventory separately. You cannot value the entire inventory at cost ($950) and at market ($800) and then use the lower of the two figures.
Under the retail method, the total retail selling price of goods on hand at the end of the tax year in each department or of each class of goods is reduced to approximate cost by using an average markup expressed as a percentage of the total retail selling price.
To figure the average markup, apply the following steps in order.
Add the total of the retail selling prices of the goods in the opening inventory and the retail selling prices of the goods you bought during the year (adjusted for all markups and markdowns).
Subtract from the total in (1) the cost of goods included in the opening inventory plus the cost of goods you bought during the year.
Divide the balance in (2) by the total selling price in (1). The result is the average markup percentage.
Then determine the approximate cost in three steps.
Subtract the sales at retail from the total retail selling price. The result is the closing inventory at retail.
Multiply the closing inventory at retail by the average markup percentage. The result is the markup in closing inventory.
Subtract the markup in (2) from the closing inventory at retail. The result is the approximate closing inventory at cost.
You can figure the cost of goods on hand by either a perpetual or book inventory if inventory is kept by following sound accounting practices. Inventory accounts must be charged with the actual cost of goods purchased or produced and credited with the value of goods used, transferred, or sold. Credits must be determined on the basis of the actual cost of goods acquired during the year and their inventory value at the beginning of the tax year.
You claim a casualty or theft loss of inventory, including items you hold for sale to customers, through the increase in the cost of goods sold by properly reporting your opening and closing inventories. You cannot claim the loss again as a casualty or theft loss. Any insurance or other reimbursement you receive for the loss is taxable.
You can choose to claim the loss separately as a casualty or theft loss. If you claim the loss separately, adjust opening inventory or purchases to eliminate the loss items and avoid counting the loss twice.
If you claim the loss separately, reduce the loss by the reimbursement you receive or expect to receive. If you do not receive the reimbursement by the end of the year, you cannot claim a loss for any amounts you reasonably expect to recover.
Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for production or resale activities. Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property.
Special uniform capitalization rules apply to a farming business. See chapter 6 in Pub. 225.
Generally, you can choose any permitted accounting method when you file your first tax return. You do not need to obtain IRS approval to choose the initial accounting method. You must, however, use the method consistently from year to year and it must clearly reflect your income. See Accounting Methods, earlier.
Once you have set up your accounting method and filed your first return, generally, you must receive approval from the IRS before you change the method. A change in your accounting method includes a change not only in your overall system of accounting but also in the treatment of any material item. A material item is one that affects the proper time for inclusion of income or allowance of a deduction. Although an accounting method can exist without treating an item consistently, an accounting method is not established for that item, in most cases, unless the item is treated consistently.
Filing exception for certain first-year tangible property changes.
A small business taxpayer may make certain tangible property changes in method of accounting for its first taxable year beginning on or after January 1, 2014 without filing Form 3115. Under these special procedures, the change in method of accounting is effectively made on a cut-off basis. These special method change procedures apply to small business taxpayers making certain method changes to comply with Regulations section 1.263(a)-3 and 1.168(i)-8. See Revenue Procedure 2015-20, 2015-9 I.R.B. 694. See Notice 2017-6, 2017-3 I.R.B. 422 (or any successor) for information on the extension of the eligibility rules for waivers for certain automatic changes to comply with the tangible property regulations.
For more information on making changes in accounting methods, see Form 3115 and the instructions for Form 3115. Also see Revenue Procedure 2016-29, 2016–21 I.R.B. 880 (or any successor).
When filing Form 3115, you must determine if the IRS has issued any new published guidance which includes revenue procedures, revenue rulings, notices, regulations, or other relevant guidance in the Internal Revenue Bulletin. For the latest information, visit IRS.gov.
If you have questions about a tax issue, need help preparing your tax return, or want to download free publications, forms, or instructions, go to IRS.gov and find resources that can help you right away.
Getting answers to your tax law questions. On IRS.gov get answers to your tax questions anytime, anywhere.
Go to IRS.gov/ita for the Interactive Tax Assistant, a tool that will ask you questions on a number of tax law topics and provide answers. You can print the entire interview and the final response for your records.
Go to IRS.gov/pub17 to get Pub. 17, Your Federal Income Tax for Individuals, which features details on tax-saving opportunities, 2016 tax changes, and thousands of interactive links to help you find answers to your questions. View it online in HTML or as a PDF or, better yet, download it to your mobile device to enjoy eBook features.
You may also be able to access tax law information in your electronic filing software.
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights.
We can help you resolve problems that you can’t resolve with the IRS. And our service is free. If you qualify for our assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:
Your problem is causing financial difficulty for you, your family, or your business,
You face (or your business is facing) an immediate threat of adverse action, or
You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.
We have offices in every state, the District of Columbia, and Puerto Rico. Your local advocate’s number is in your local directory and at taxpayeradvocate.irs.gov. You can also call us at 1-877-777-4778.
The Taxpayer Bill of Rights describes 10 basic rights that all taxpayers have when dealing with the IRS. Our Tax Toolkit at taxpayeradvocate.irs.gov can help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.
TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, please report it to us at IRS.gov/sams.
Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. To find a clinic near you, visit IRS.gov/litc or see IRS Publication 4134, Low Income Taxpayer Clinic List.
- Accounting methods
- Accounting periods
- Accrual method
- Advance payments, Advance Payment for Services
- Assistance (see Tax help)
- Business purpose tax year, Business Purpose Tax Year
- Calendar year, Calendar Year
- Cash method, Income
- Change, accounting method, Change to accrual method., Change in Accounting Method
- Comments on publication, Comments and suggestions.
- Constructive receipt of income, Constructive receipt.
- Corporation tax periods, Corporations (Other Than S Corporations and PSCs)
- Cost identification, Identifying Cost
- Death of individual, short period return, Death of individual.
- Identity theft, Resolving tax-related identity theft issues.
- Cost identification, Identifying Cost
- FIFO, FIFO Method
- LIFO, LIFO Method
- Lower of cost or market, Lower of Cost or Market Method
- Perpetual or book, Perpetual or Book Inventory
- Retail method, Retail Method
- Specific identification, Specific Identification Method
- Uniform capitalization rules, Inventories.
- Valuing, Valuing Inventory
- Partnerships, Partnership
- Personal service corporation, Partnerships, S Corporations, and Personal Service Corporations (PSCs)
- Limit, use of cash method, Qualified Personal Service Corporation (PSC).
- Required tax year, Partnerships, S Corporations, and Personal Service Corporations (PSCs), Personal Service Corporation (PSC)
- Publications (see Tax help)
- Related persons, Related Persons
- Tax help, How To Get Tax Help
- Tax year