New guidance on changing accounting methods

Accounting

The Internal Revenue Service issued a new revenue procedure with guidance on how certain businesses can obtain automatic consent to a change in accounting methods.

Revenue Procedure  2022-9 modifies Rev. Proc. 2019-43, 2019-48 I.R.B. 1107 to lay out the new procedures under Sec. 446 of the Tax Code and Sec. 1.446-1(e) of the Income Tax Regulations to obtain automatic consent to change methods of accounting to comply with the final regulations under Secs. 263A, 448, 460 and 471 of the code issued on Jan. 5, 2021. It also modifies Rev. Proc. 2018-40, 2018-34 I.R.B. 320, to remove the option of netting the remaining portion of a Sec. 481(a) adjustment that resulted from a prior method change.

The revenue procedure also details the procedures for revoking an accounting method change election made for taxable years starting on or after Jan. 5, 2021.

The regs implement a provision of the Tax Cuts and Jobs Act aimed at relieving smaller businesses from some reporting complexity by raising the eligibility threshold for using the cash method to $25 million

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