The Tax Cuts and Jobs Acts – better known simply as tax reform – allows more small business taxpayers to use the cash method of accounting. Tax reform now defines a small business taxpayer as a taxpayer that has average annual gross receipts of $25 million or less for the three prior tax years and is not a tax shelter.
Here’s how last year’s legislation changed the rules for small business taxpayers. The law:
Expands the number of small business taxpayers eligible to use the cash method of accounting by increasing the average annual gross receipts threshold from $5 million to $25 million, indexed for inflation.
Allows small business taxpayers with average annual gross receipts of $25 million or less for the three prior tax years 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 the cash method of accounting for tax years beginning after Dec. 31, 2017.
Read more here: http://bit.ly/2DCSozC
Shared from: irs.gov