Taxpayers can use a wide variety of accounting techniques to keep their books. Cash and accrual methods along with hybrids of the two are used by various taxpayers to best show the flow of income to their businesses. The IRS also wants a system that clearly shows income, but how the IRS wants the income tracked and how taxpayers would like to see it done could diverge. Susan Flax Posner, J.D., LL.M, looks at how accounting decisions affect tax compliance in the 2004 Federal Tax Course. This 62-page chapter looks at all the angles, and it helps tax professionals look at the accounting decisions that are made with an eye toward how that will be reflected on a tax return.
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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.
Read this article from CCH’s Journal of Taxation of Financial Products.