Taxpayers that use the accrual method and receive advance payments for good or services were given new rules by the IRS on when to include the advance payments in income.
Tax Accounting (Methods & Periods)
The Tax Cuts and Jobs Act made some widely applicable but, perhaps, lesser-known changes to accrual accounting rules.
The IRS provided the limitations on depreciation deductions for passenger automobiles first placed in service in 2019 and the amounts of income inclusion for lessees of passenger automobiles first leased during 2019.
Rev. Proc. 2019-13 allows a deduction in succeeding years of excess unrecovered basis remaining after the Sec. 280F first-year limitation.
The IRS issued a safe-harbor procedure that taxpayers may follow for determining the deduction for depreciating passenger vehicles when they are eligible for 100% bonus depreciation but are also subject to the Sec. 280F limits on deductions for luxury automobiles.
The cash method and other favorable rules are now more widely available with Tax Cuts and Jobs Act changes.
TCJA changes also include that eligible property does not have to be new.
The IRS announced procedures for taxpayers to change their accounting method to comply with the amendment of Sec. 451(b) enacted by the tax law known as the Tax Cuts and Jobs Act.
The IRS issued final regulations on the use of negative adjustments under Sec. 263A’s simplified methods for determining costs that must be capitalized.
The IRS is proposing to remove regulations on advance payments and long-term contracts to reflect amendments to Sec. 451 included in the law known as the Tax Cuts and Jobs Act.
The IRS issued proposed regulations providing guidance on Sec. 168(k), which was amended by P.L. 115-97, known as the Tax Cuts and Jobs Act, to increase the allowable first-year depreciation deduction for qualified property from 50% to 100%.
Forthcoming regulations will cover consolidated groups and carryforward of pre-TCJA interest expense.
The IRS issued updated procedures for automatic accounting method changes. The new rules generally apply to changes on or after May 9, 2018.
The IRS has issued initial guidance on the new rules governing the deductibility of business interest in Sec. 163(j), as amended by the Tax Cuts and Jobs Act of 2017.
FASB issued new rules that provide financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act.
Companies with deferred tax assets may report surprisingly lower net income in 2017 even though they will benefit from lower income tax rates under the new tax law in 2018.
Even the simplest uses of this increasingly popular medium of exchange will likely involve a basis calculation for tax purposes.
A sometimes overlooked adjustment may cause deficiencies and penalties.
Tax preparers must reckon with not only transfers for property but also for other virtual currencies.
A change in accounting method opens the door for the IRS to review periods closed by the statute of limitation to determine tax liability in open years.