Usually you see §481(a) adjustments kick in when the change in accounting method requires you to recognize additional income. The IRS doesn't want you to avoid making a change that should be made just because you don't want to take the tax hit all in one year. They allow you to spread the additional income out equally over a 4 year period. For example, I had a client who came to me from another accountant. This Taxpayer was a retail establishment, and a C corporation, and the prior accountant set him up as a cash basis taxpayer for filing
his tax return
. He kept his books on the accrual method, which was GAAP. This was wrong for two reasons. First, any entity with inventory is generally required to use the accrual method of accounting. Second, C-Corporations are required to use the accrual method of accounting.
This particular taxpayer had very few payables but over $150k of accounts receivable. We changed him to the accrual basis of accounting, which required him to recognize as income the $150k of Accounts Receivable. We were allowed to take this into income over a 4 year period, at $37.5k per year. That is the usual type of §481 adjustment.
In your situation, you are considered to have met the all-events test if you accrue the bonus and actually pay it by the end of the 2 1/2 month period.
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