The IRS will provide automatic consent to a small business taxpayer’s application to change to the cash method of accounting. Eligible small business taxpayers, as defined by the Tax Cuts and Jobs Act (P.L. 115-97), are generally those with average annual gross earnings of $25 million or less in the prior three-year period.

The automatic consent changes include:

  • A switch to the cash method of accounting;
  • Exemption from UNICAP for certain costs, including self-constructed assets;
  • Certain changes to inventory items;
  • A change from the percentage-of-completion method for long-term construction contracts; and
  • Exemption from UNICAP for home construction contracts.

If you have questions about the accounting method changes as it relates to small businesses, contact an MCB Tax Advisor at 703-218-3600 or click here. To review a summary of recent tax news articles, click here. To learn more about MCB’s tax practice and our tax experts, click here.

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