Proposed House tax reform bill would retain cash accounting
for all farms: House Ways and Means Committee Chairman Dave Camp (R-Mich.
Luisiana Dobrinescu, partner at law firm Dobrinescu Dobrev, says the "psychological" conditions are in place to make the VAT cash accounting
system, which has had a negative impact on small companies, optional.
The switch from cash accounting
to accrual accounting--which determines revenues and expenses when a debt is incurred rather than after a payment is made--will take two years to fully adopt, he said.
Midlands-based accountants Dains has welcomed news of an extension of the popular VAT cash accounting
scheme to an additional 50,000 businesses.
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His concern is whether he should contribute his practice's accounts receivable to the new partnership, which will also use cash accounting
If financial statements done under the accrual basis don't show any material difference from those done under cash accounting
, there's little reason to switch.
The proposed revenue procedure allows certain taxpayers with annual average gross receipts (over the three prior taxable years) of not more than $10 million to convert to the cash accounting
Until now, cash accounting
was limited to firms with under $1 million in receipts.
One such issue is the Treasury Department's interpretation of Section 448 of the IRC, which the Treasury Department has interpreted as not guaranteeing a small business the right to use cash accounting