Alice, Inc., is an S corporation that has been in business for five years. Its annual gross receipts have never exceeded $1 million. The corporation operates a retail store and also owns rental property. The sales from the retail store and the rental income may be reported by the cash method, unless Alice previously elected the accrual method.

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Small businesses with average annual gross receipts of $1 million or less may use the cash method of accounting for tax purposes, unless they have previously elected to use the accrual method. As Alice, Inc.'s annual gross receipts have not exceeded $1 million, it may use the cash method for reporting its retail and rental income.