Sec. 3202. Small business accounting method reform and simplification

1,247 words·~6 min read·/bill/115/hr/1/ih/section-3202

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

So much of section 448(c) as precedes paragraph

(2)is amended to read as follows: For purposes of this section— A corporation or partnership meets the gross receipts test of this subsection for any taxable year if the average annual gross receipts of such entity for the 3-taxable-year period ending with the taxable year which precedes such taxable year does not exceed $25,000,000. . Section 448(b)(3) is amended to read as follows: Paragraphs

(1)and

(2)of subsection

(a)shall not apply to any corporation or partnership for any taxable year if such entity (or any predecessor) meets the gross receipts test of subsection

(c)for such taxable year. . Section 448(c) is amended by adding at the end the following new paragraph: In the case of any taxable year beginning after December 31, 2018, the dollar amount in paragraph

(1)shall be increased by an amount equal to— such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(c)(2) for the calendar year in which the taxable year begins, by substituting calendar year 2017 for calendar year 2016 in subparagraph (A)(ii) thereof. If any amount as increased under the preceding sentence is not a multiple of $1,000,000, such amount shall be rounded to the nearest multiple of $1,000,000. . Section 448(d)(7) is amended to read as follows: Any change in method of accounting made pursuant to this section shall be treated for purposes of section 481 as initiated by the taxpayer and made with the consent of the Secretary. . Section 447(c) is amended— by inserting for any taxable year after not being a corporation in the matter preceding paragraph (1), and by amending paragraph

(2)to read as follows: a corporation which meets the gross receipts test of section 448(c) for such taxable year. . Section 447(f) is amended to read as follows: Any change in method of accounting made pursuant to this section shall be treated for purposes of section 481 as initiated by the taxpayer and made with the consent of the Secretary. . Section 447 is amended— by striking subsections (d), (e), (h), and (i), and by redesignating subsections

(f)and

(g)(as amended by subparagraph (B)) as subsections

(d)and (e), respectively. Section 263A is amended by redesignating subsection

(i)as subsection

(j)and by inserting after subsection

(h)the following new subsection: In the case of any taxpayer (other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3)) which meets the gross receipts test of section 448(c) for any taxable year, this section shall not apply with respect to such taxpayer for such taxable year. In the case of any taxpayer which is not a corporation or a partnership, the gross receipts test of section 448(c) shall be applied in the same manner as if each trade or business of such taxpayer were a corporation or partnership. Any change in method of accounting made pursuant to this subsection shall be treated for purposes of section 481 as initiated by the taxpayer and made with the consent of the Secretary. . Section 263A(b)(2) is amended to read as follows: Real or personal property described in section 1221(a)(1) which is acquired by the taxpayer for resale. . Section 471 is amended by redesignating subsection

(c)as subsection

(d)and by inserting after subsection

(b)the following new subsection: In the case of any taxpayer (other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3)) which meets the gross receipts test of section 448(c) for any taxable year— subsection

(a)shall not apply with respect to such taxpayer for such taxable year, and the taxpayer’s method of accounting for inventory for such taxable year shall not be treated as failing to clearly reflect income if such method either— treats inventory as non-incidental materials and supplies, or conforms to such taxpayer’s method of accounting reflected in an applicable financial statement of the taxpayer with respect to such taxable year or, if the taxpayer does not have any applicable financial statement with respect to such taxable year, the books and records of the taxpayer prepared in accordance with the taxpayer’s accounting procedures. For purposes of this subsection, the term applicable financial statement means— a financial statement which is certified as being prepared in accordance with generally accepted accounting principles and which is— a 10-K (or successor form), or annual statement to shareholders, required to be filed by the taxpayer with the United States Securities and Exchange Commission, an audited financial statement of the taxpayer which is used for— credit purposes, reporting to shareholders, partners, or other proprietors, or to beneficiaries, or any other substantial nontax purpose, but only if there is no statement of the taxpayer described in clause (i), or filed by the taxpayer with any other Federal or State agency for nontax purposes, but only if there is no statement of the taxpayer described in clause

(i)or (ii), or a financial statement of the taxpayer which— is used for a purpose described in subclause (I), (II), or

(III)of subparagraph (A)(ii), or filed by the taxpayer with any regulatory or governmental body (whether domestic or foreign) specified by the Secretary, but only if there is no statement of the taxpayer described in subparagraph (A). In the case of any taxpayer which is not a corporation or a partnership, the gross receipts test of section 448(c) shall be applied in the same manner as if each trade or business of such taxpayer were a corporation or partnership. Any change in method of accounting made pursuant to this subsection shall be treated for purposes of section 481 as initiated by the taxpayer and made with the consent of the Secretary. . Section 460(e)(1)(B) is amended— by inserting (other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3)) after taxpayer in the matter preceding clause (i), and by amending clause

(ii)to read as follows: who meets the gross receipts test of section 448(c) for the taxable year in which such contract is entered into. . Section 460(e) is amended by striking paragraphs

(2)and (3), by redesignating paragraphs (4), (5), and

(6)as paragraphs (3), (4), and (5), respectively, and by inserting after paragraph

(1)the following new paragraph: For purposes of paragraph (1)(B)(ii), in the case of any taxpayer which is not a corporation or a partnership, the gross receipts test of section 448(c) shall be applied in the same manner as if each trade or business of such taxpayer were a corporation or partnership. Any change in method of accounting made pursuant to paragraph (1)(B)(ii) shall be treated as initiated by the taxpayer and made with the consent of the Secretary. Such change shall be effected on a cut-off basis for all similarly classified contracts entered into on or after the year of change. . Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 2017. So much of the amendments made by subsection (a)(5)(C) as relate to section 447(i) of the Internal Revenue Code of 1986 shall not apply with respect to any suspense account established under such section before the date of the enactment of this Act. The amendments made by subsection

(d)shall apply to contracts entered into after December 31, 2017, in taxable years ending after such date.