Publication 538 - Accounting Periods And Methods
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23Contents
Department of the Treasury
Internal Revenue Service
Future Developments
1
. . . . . . . . . . . . . . . . . . . . . . .
Introduction
1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Publication 538
(Rev. December 2016)
Photographs of Missing Children
2
. . . . . . . . . . . . . .
Cat. No. 15068G
Accounting Periods
2
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Accounting
Calendar Year
2
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Fiscal Year
3
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Short Tax Year
3
. . . . . . . . . . . . . . . . . . . . . . . . . .
Periods and
Improper Tax Year
4
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Change in Tax Year
4
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Methods
Individuals
4
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partnerships, S Corporations, and Personal
Service Corporations (PSCs)
4
. . . . . . . . . . . . . .
Corporations (Other Than S Corporations and
PSCs)
7
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Accounting Methods
7
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Cash Method
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Accrual Method
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Inventories
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Change in Accounting Method
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How To Get Tax Help
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Index
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Future Developments
The IRS has created a page on IRS.gov for information
about
Publication
538,
at
Information
about
recent
developments
affecting
Publication 538 will be posted on that page.
Introduction
Every taxpayer (individuals, business entities, etc.) must
figure taxable income for an annual accounting period
called a tax year. The calendar year is the most common
tax year. Other tax years include a fiscal year and a short
tax year.
Each taxpayer must use a consistent accounting
method, which is a set of rules for determining when to re-
port income and expenses. The most commonly used ac-
counting methods are the cash method and the accrual
method.
Under the cash method, you generally report income in
the tax year you receive it, and deduct expenses in the tax
year in which you pay the expenses.
Under the accrual method, you generally report income
in the tax year you earn it, regardless of when payment is
received. You deduct expenses in the tax year you incur
them, regardless of when payment is made.
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Feb 09, 2017
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