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You could change your accounting method from cash to accrual, but you would need to file for IRS approval using form 3115 before you would be allowed to make the change
I am fine how are you?
Is it then correct that if I use accrual I could write off expenses that are not yet paid. (and probably never will be). If so would it be feasible to do this by the Sept 15 2013 deadline? I was thinking I have enough loss to zero out my tax burden for this year. Maybe I could make the switch for 2013?
I find it unlikely that the IRS would grant your request to make the change for that reason
So what your saying is that there is really no valid reason for changing my reporting method?
That is correct, not in this case...it would if you were continuing operations
True but technically I could resume business at some point. I did not dissolve the business or file a business bankruptcy. I just stopped doing business.
Okay then what you would do is file form 3115 and get IRS approval, and then if granted you would be able to use the accrual basis
Then maybe my strategy due to time constraints could be to go ahead and file as I have prepared it. (cash basis). Then after I file 3115 and get approval I could file an amended return??
You would have to prepare the return under the accrual basis, and attach form 3115 to the return
you can't do form 3115 with an amended return
Oh I see. Do you know if there is time to do all this by Sept 15?
Well, that's up to you and your tax preparer
I am the tax preparer. (can't afford one due to business failure).My question is are you familiar with how long it takes on average to get a 3115 request approved?
You file it with your tax return --so you prepare it and file your return and if the IRS disallows the change then you would have to amend your return
Oh I understand now. That makes sense. I think I can take it from here. Thanks so much for your expert advice!