IRS proposes regulations for small business accounting

The Internal Revenue Service proposed regulations at the end of July to adopt simplified tax accounting rules for small businesses under the Tax Cuts and Jobs Act.

“Prior to the TCJA, certain taxpayers could determine whether they were eligible to figure taxable income under the cash method of accounting by meeting a different gross receipts test,” the IRS stated. “That gross receipts test was met if the taxpayer’s average annual gross receipts for all prior taxable years did not exceed $5 million.

“After the TCJA, a taxpayer meets the gross receipts test and can use the cash method if average annual gross receipts for the three-taxable-year period ending immediately before the current taxable year are $25 million (adjusted for inflation) or less.”

For more, head to irs.gov