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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13475
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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for the last two years I have inventory on my balance sheet

Resolved Question:

for the last two years I have inventory on my balance sheet (small corporation with 100% ownershiP) Can I change back to cash basis system, without inventory on balance sheet? Is itfeasible?
Submitted: 2 years ago.
Category: Tax
Expert:  Megan C replied 2 years ago.
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

In order to change back to the cash basis for tax purposes, you will need to get advance approval from the IRS. You can do that by filling form 3115, which is available HERE.

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Customer: replied 2 years ago.
Thank you. Will I get in trouble (an audit) when filing this form 3115?
Expert:  Megan C replied 2 years ago.
No - because you fill out this form BEFORE you file your tax return, and the IRS either approves it or denies it. If they deny it and you still change methods you will get an audit. If they approve it, then you won't get an audit for this reason and the IRS will be expecting to see the change.

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Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13475
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 2 other Tax Specialists are ready to help you

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