Copper Corporation, a C corporation, had gross receipts of $25 million in 2015, $26 million in 2016, and $23 million in 2017. Gold Corporation, a personal service corporation (PSC), had gross receipts of $24 million in 2015, $27 million in 2016, and $25 million in 2017. Which of the corporations will be allowed to use the cash method of accounting in 2018?
A) Copper Corporation only.
B) Gold Corporation only.
C) Both Copper Corporation and Gold Corporation.
D) Neither Copper Corporation nor Gold Corporation.
E) None of the above.

Question

Quizplus · Accepted Answer

The Tax Cuts and Jobs Act of 2017 increased the limit for using the cash method of accounting to businesses with average gross receipts of less than $25 million for the three previous tax years. Therefore, both Copper Corporation and Gold Corporation will be allowed to use the cash method of accounting in 2018 since their average gross receipts for the previous three years were less than $25 million.

Copper Corporation, a C Corporation, Had Gross Receipts of $25