Tax Methods & Periods

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Tax Methods & Periods

This section covers issues concerning tax accounting methods and periods. It contains articles, tools and practice aids, as well as comment letters pertaining to legislative matters and IRS regulation and administration. Some of the topics in this section include:

overall methods of accounting (cash, accrual, hybrid)
timing of income
timing of deductions, including capitalization versus expensing
inventory methods (FIFO, LIFO, average cost, cost, cost or market, whichever is lower, sub-normal goods)
uniform capitalization of costs (Sec. 263A)
accounting periods, including voluntary changes in accounting periods
voluntary changes in accounting methods (automatic and prior approval)
domestic production activities deduction (Sec. 199)
tax consequences associated with international financial reporting standards (IFRS)

Learn about the AICPA's Tax Methods and Periods Technical Resource Panel, the volunteers who assist with many of our advocacy and member service efforts in this technical area.

Practice Support

Below are some recent tools and aids regarding tax accounting methods and periods. Also see the comprehensive list of tools developed in this area.

Notice 2012-73 delays the effective date of the temporary regulations to January 1, 2014.
IRS updates Publication 538, Accounting Periods and Methods (10.19.2012).
- Rev. Proc. 2012-39 potentially impacts Forms 3115 filed on or after September 4, 2012 under Rev. Proc. 2011-14 or Rev. Proc. 97-27.
- Check out our tangible property resources webpage. Temporary regulations and other guidance released at the end of 2011 and in 2012 regarding tangible property, affect all taxpayers that acquire, produce or improve tangible property. Generally effective for tax years beginning on or after January 1, 2014.
  - New Tool - Chart of Annual Elections to Consider once a taxpayer is in compliance with temp. regs. (as of October 27, 2012).
  - These Rules Apply to Schedules C, E & F too.
  - New Tool - Chart Summarizing Key Aspects of Rev. Procs. 2012-19 and 2012-20 (as of October 1, 2012).
- Online article 09.04.2012 Proposed Regs. Issued on Allocating Sec. 263A Costs under Simplified Methods, follow up on Notice 2007-29 and treatment of negative amounts.
- Article in 08.2012 The Tax Adviser on Circular 230, Section 10.21, and SSTS No. 6. Standards Relating to Taxpayer Errors and Omissions. Includes use of erroneous method of accounting.
- Article in 07.2012 The Tax Adviser on Post-Deal Depreciation: Impact of Certain Nonrecognition Transactions.
- Article in 06.2012 The Tax Adviser on Non-accrual-Experience Book Safe-Harbor Method.
- 2011 practice guides on:
- Article in 06.2011 The Tax Adviser on Could Forgetting to Include Effect of UNICAP Put Accounting Method Changes at Risk?
- Links to other topical articles and technical developments on various tax accounting methods and periods issues.
- Disclosure of Uncertain Tax Positions resources webpage.

Advocacy

Below are some recent advocacy efforts regarding tax accounting methods and periods. Also see the comprehensive list of advocacy documents submitted to IRS, Treasury, Congress, and other governmental agencies in this area.

AICPA 12.13.2012 submitted comment letter on proposed regulations under section 471 - Guidance Regarding The Retail Inventory Method of Accounting (Reg-125949).

AICPA 11.01.2012 Comment Letter requesting further relief due to Hurricane Sandy, including tax accounting method change and election impacts if certain tax returns can not be filed timely.

AICPA Testimony 09.13.2012, before House Small Business Economic Growth, Tax, and Capital Access Subcommittee regarding Impact of Fiscal Cliff and Tax Uncertainty on Small Business - includes advocacy regarding Sec. 179 and bonus depreciation rules.

AICPA 07.30.2012 Comment Letter on the definition of issue under consideration for certain foreign corporations.

AICPA 07.18.2012 Comment Letter concerning the accounting method for income from gift card receipts.

AICPA 07.16.2012 Comment Letter with additional comments and recommendations on proposed and temporary regulations under Sections 162(a), 168, and 263(a) regarding deduction and capitalization of expenditures related to tangible property (REG-168745-03 and TD 9564) and Revenue Procedures 2012-19 and 2012-20. See prior AICPA testimony before the IRS and Treasury at the 05.09.2012 public hearing. Also see prior AICPA 04.17.2012 Comment Letter.

AICPA 05.01.2012 Comment Letter regarding recommendations for 2012 - 2013 Guidance Priority List, including comments associated with Tax Accounting Methods and Periods.

AICPA 08.01.2011 Comment Letter on Schedule M-3, providing additional comments and recommendations with the objective of reducing burden and duplication.