Guide to the New Accounting Methods for Small and Medium-Sized Businesses (NACM)

Vicki Mulak, EA, Kenneth Heaslip, CPA, Lance Weiss, CPA, CVA, Michael J. Tucker, CPA, LL.M.
  • 3
  • Intermediate
  • Taxes

Individual course: $91
Best Value: All-Star Tax Season Pass
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The Tax Cuts and Jobs Act expanded the number of small business taxpayers eligible to use the cash receipts and disbursements method of accounting and exempted these small businesses from certain accounting rules for inventories, cost capitalization and long-term contracts. The new law also amended Section 163(j) to disallow a deduction for net business interest expense of any taxpayer in excess of 30% of a business’s adjusted taxable income plus floor plan financing interest. This program is an in-depth discussion of these issues and many others related to accounting methods after tax reform.

Major Topics:

  • New interest limitation rules under Section 163(j)
  • Which taxpayers can elect out of the interest limitation rules and how to do so
  • Preparing Form 3115 to make accounting method changes for taxpayers switching to the cash method or desiring a different method for inventories or long-term contracts
  • When and how to make the Section 481(a) adjustment for the relevant accounting method changes
  • Determining the taxpayer’s gross receipts for the $25 million gross receipts test

Learning Objectives

  • Be able to effectively make accounting method changes for clients
  • Understand the Sec. 163(j) interest limitation, including circumstances when the interest limit does not apply.

Tax practitioners who anticipate advising clients regarding whether to make accounting method changes allowed by the Tax Cuts and Jobs Act and whether the Sec. 163(j) interest limitation applies

A basic understanding of the tax rules relating to individual income tax




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