Accounting method change procedures for book-tax conformity rule
The IRS has provided procedures (Rev. Proc. 2018-60) under which a taxpayer may obtain automatic consent to change a method of accounting to comply with Sec. 451(b), as amended by the law known as the Tax Cuts and Jobs Act, P.L. 115-97. The revenue procedure also gives certain qualifying taxpayers with streamlined procedures to make a method change to comply with Sec. 451(b) without filing a Form 3115, Application for Change in Accounting Method, for the first tax year that begins after Dec. 31, 2017.
The TCJA made several changes to the timing of income for accrual method taxpayers, including adding new Sec. 451(b), which is generally effective for tax years beginning after Dec. 31, 2017. Sec. 451(b) generally imposes a book-tax conformity rule for recognizing income for tax purposes. It provides that an accrual method taxpayer cannot treat the all-events test as being met for any item of gross income (or portion thereof) any later than when that item is taken into account as revenue in the taxpayer’s applicable financial statement (or other financial statement specified by the IRS). Read more on the Journal of Accountancy.