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Discussion Forum Index --> Tax Questions --> Cash vs Accrual
Rickiemc (talk|edits) said:
| 17 February 2006
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| C Corporation is on cash basis. The rules state that if you average 10 million over a 3 year period, you must switch to accrual basis. If 2003, 2004, and 2005 average is over 10 million, do you switch to accrual in 2005 or next year, 2006?
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Jmrmdcpa (talk|edits) said:
| 17 February 2006
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| C corporations must switch to the accrual method if their average revenues exceed $5 million, unless the corporation is a personal service corporation. The $10 million limit applies to S corporations only.
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Rickiemc (talk|edits) said:
| 18 February 2006
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| Followup question: Do you switch in year your average gross receipts go over limit, or the following year?
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Shana (talk|edits) said:
| 19 February 2006
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| its's the average of the prior 3 years -- if PRIOR 3 yrs over limit then you would switch in current yr
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Winchestercpa (talk|edits) said:
| 12 April 2007
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| I have a C Corp who will go over the $5M in 2007. It is a new client and the previous accountant has been keeping a spreadsheet to reconcile book to tax since they use quicken and the cash reports do not properly remove accruals etc. It is a complicated process and I do not want to continue it. In 2007 and beyond I will use the accrual basis but I have a reconciliation problem with the tax return....what is the best way to rollforward retained earnings and reconcile to the books?
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