Several years ago, T started an automotive repair business.His small operation did not warrant a sophisticated accounting system.Consequently, he simply kept track of all his receipts and disbursements in a checkbook for the business.When he filed his return, he indicated that he used the cash method of accounting.This year he wants to change to the accrual method of accounting.J may change to the accrual method without consent because he is changing to an accounting method that more clearly reflects income.

Question

Quizplus · Accepted Answer

To change from the cash method to the accrual method of accounting, a taxpayer generally needs to obtain consent from the IRS by filing Form 3115, Application for Change in Accounting Method. This process ensures that the change does not distort income and that taxes are properly accounted for during the transition period.

Several Years Ago, T Started an Automotive Repair Business