IRS issues accounting-method change procedures for small businesses
New procedures follow final regulations to implement simplifications by the law known as the Tax Cuts and Jobs Act.
Tax Accounting
Sec. 481(a) adjustment affects business interest deduction calculation
The IRS advised that a net negative Sec. 481(a) adjustment resulting from a change in method of accounting for depreciation must be included in calculating adjusted taxable income.
Automatic accounting method change procedures updated
The IRS updated the list of accounting method changes to which automatic change procedures apply.
IRS provides new guidance on accounting method changes for CFCs
For a limited time, the IRS is allowing automatic change procedures for CFCs changing to the ADS method and has clarified the process and certain aspects of audit protection.
AICPA requests LIFO safe harbor
Global supply chain problems caused by the COVID-19 pandemic have made it difficult for US companies to replace inventories, potentially subjecting them to additional taxable income. The AICPA has requested relief under Sec. 473.
Simplifying the accounting for income taxes
As part of its initiative to reduce complexity in accounting standards, FASB issued ASU No. 2019-12 in late 2019 for the purpose of simplifying accounting for income taxes.
Naked credits and the interest expense limitation
New regulations providing guidance on the application of the Sec. 163(j) interest expense limitation may change how some companies calculate their naked credit.
Automatic procedures to change a CFC’s depreciation method
The IRS issued Rev. Proc. 2021-26, which contains procedures for certain foreign corporations to obtain automatic consent to change their methods of accounting for depreciation to the alternative depreciation system.
Automobile depreciation limits adjusted for 2021
The IRS issued its annual inflation-adjusted update of depreciation limitations for passenger automobiles (including passenger vans and trucks) placed in service in 2021.
Final regs. issued on qualified improvement property under FDII, GILTI
Final regulations clarify the treatment of qualified improvement property in FDII and GILTI, and foreign tax credit transition rules address post-2017 NOL carrybacks to pre-2018 tax years.
Qualified improvement property and bonus depreciation
The CARES Act corrected an error that had made qualified improvement property ineligible for bonus depreciation; IRS regulations and guidance explain how to take advantage of the change.
Interruption of LIFO inventories due to COVID-19 and Sec. 473 relief
Global supply chain problems caused by the COVID-19 pandemic have made it difficult for US companies to replace inventories, potentially subjecting them to additional taxable income. The AICPA has requested relief under Sec. 473.
Automatic accounting method change procedures updated
The IRS updated the list of accounting method changes to which automatic change procedures apply.
IRS updates car and truck depreciation limits
The IRS issued its annual inflation-adjusted update of depreciation limitations for passenger automobiles (including passenger vans and trucks) placed in service in 2021.
Commercial real estate: Landlords can turn to Sec. 467
This item explores commercial property holders’ use of Sec. 467, which governs the timing of rental income and expense in certain circumstances.
Acceleration of deferred revenue in M&As
Sec. 451(c) should be considered when structuring such M&A transactions — including special rules relating to short tax years of 92 days or less.
Accounting method planning to decrease taxable income
This item provides examples of accounting method changes or elections that may decrease taxable income.
Accounting method planning to increase taxable income
In certain circumstances, taxpayers may benefit from increasing taxable income; accounting method planning can help taxpayers achieve that objective.
When does it make sense to elect out of the installment method?
Reporting gain in the year of a sale rather than with installments over time may become more attractive as proposals for higher capital gains tax rates gain traction. This article weighs the pros and cons.
The partner-to-partner attribution trap and the anti-churning rules
Taxpayers dealing with tax basis step-up transactions involving related parties or rollover equity interests should consider the application of the anti-churning rules to avoid unforeseen results.
