ACME Partnership has had the following gross receipts since its formation: $1.8 million in 2014,$4.6 million in 2015,$8.8 million in 2016,$1.6 million in 2017,and $10 million in 2018.Partner Meile,Inc.is a Subchapter C corporation.In what tax years must ACME use the accrual method?

Question

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According to the tax law, a corporation must use the accrual method if its average annual gross receipts exceed $5 million for the three prior tax years. ACME Partnership's gross receipts were $4.6 million in 2015, so it did not meet the threshold in that year. However, in 2016, its gross receipts were $8.8 million, which means its average annual gross receipts for the three prior years (i.e., 2014-2016) were $5.07 million, exceeding the $5 million threshold. Therefore, ACME must use the accrual method beginning in 2017 and all following years.

ACME Partnership Has Had the Following Gross Receipts Since Its