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I have a cash basis S Corp that needs to become accrual

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basis. They issue gift cards...
I have a cash basis S Corp that needs to become accrual basis. They issue gift cards and want to defer the gift card income and must be accrual basis in order to do this. This will be a non-automatic payment (cash to accrual) with an automatic change #84.
Does this make this change an automatic change?Can this be done for 2017 taxes?
Thanks
Submitted: 4 months ago.Category: Tax
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3/13/2018
Tax Professional: ABC Accounting Group, Certified Public Accountant (CPA) replied 4 months ago
ABC Accounting Group
ABC Accounting Group, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 889
Experience: Business Consultant/Accounting Manager
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Hi. Great Question. All you need to do is fill out Form 3115 - https://www.irs.gov/pub/irs-pdf/f3115.pdf

Let me know if this helps and if you have any questions. Thank you.

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Customer reply replied 4 months ago
I think you understood my questions.
I was filling out Form 3115 and that created my questions on Part III (Information for Non-automatic change request). Since I have to be accrual basis in order to used Automatic #84 do I have to pay a user fee?Question 1 in part III I am using the concurrent changes under Rev Proc. 2004-34.Also you did not answer if I can use this change for 2017.
Tax Professional: ABC Accounting Group, Certified Public Accountant (CPA) replied 4 months ago

Hi. Let me opt out - I will send this to another expert, so they can look into this further. Thank you.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,085
Experience: 35 years tax experience, including four years at a Big 4 firm.
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Hi from Just Answer. I'm PDtax. I was intrigued by your question. I can assist, but need to do some background reading first.

I can't research this and advise about the 3115 for the amount deposited. I'll post an offer to assist, and can start tomorrow if we make a deal.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago

The premium service window has not opened on my end. I'll look back in tomorrow.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago

sorry, my window is still not open for premium service offering.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago

I am still unable to make the premium service offering. I will ask site personnel to assist.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago

I still can't offer you the premium service, so I will opt out. Other experts can pick up the question and assist.

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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 4 months ago
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,133
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Hi! Different expert here. I've been working in taxation for over 33 years, and have filled out several Forms 3115. I have also successfully filed a Private Letter Ruling regarding a Form 3115 and change in accounting method. So I am able to answer your question..

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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 4 months ago

When you file a request using DCN #84, requesting deferral method of revenue recognition, you have to either already be on the accrual method, or this change request must be part of a change from cash to accrual methods.

Your change will be automatic. It is on the list of automatic changes. You do qualify as you are making this request part of an overall change in method of accounting.

As far as the timing, you are allowed to make the request at any time from the 1st day of the year of desired change, to as late as the due date of the tax return. The Form 3115 must be filed in duplicate. One must be filed with the IRS National Office, and the other has to be filed with the tax return of the entity making the change. With a couple of mine, we were also required to file with the Ogden, UT processing center. There are situations where additional copies have to be filed.

As for the user fee, yes you will have to pay one. The PLR that I filed involved a Form 3115, and the user fee for that Form was $9,800. So the fees can get fairly steep.

Don't forget that you have to make your IRC §481 adjustment, and pay 1/4 of it in the first year, when you file the request.

I hope this answers your question. If you have any more, please feel free to ask and I will be happy to answer.

Thanks! Have a great week!

Roger

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