Change of accounting method: where to post A/R adj...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
jazzstan
New Member

Change of accounting method: where to post A/R adjustment on Schedule C?

For a change of accounting method, I have a reduction for past A/R reported as sales.  Where do I post on schedule C?   Problems: If I post to line 1a, it will be a negative number. (red flag for sales, no?).    If I post it to line 1b, my cash based sales will be less than what's was reported on the 1099-MISC.   

Do I just make the adjustment on 1b and include an explanation on line 1f (for why sales <> 1099)???   I suppose both are correct, but what will cause the least consternation for the IRS? 

2 Replies
Rick19744
Level 11

Change of accounting method: where to post A/R adjustment on Schedule C?

So it would be good to have a few more facts:

  • Is this just a one time error, or have you been handling this incorrectly for more than one year
  • Explain why you would have included accounts receivable in income when you are a cash basis taxpayer; which is most likely the case
  • Explain in a little bit of detail what exactly you have done (or did) in the past
  • What type of business are you involved in?
*A reminder that posts in a forum such as this do not constitute tax advice.*
jazzstan
New Member

Change of accounting method: where to post A/R adjustment on Schedule C?

No error. When I started the wholesale business 22 years ago, the accrual method was required because I had inventory.  I will be filing a 3115 to take advantage of recent reg changes to convert to cash basis, which means I will be writing off A/R for the accrued sales and writing off the inventory-on-hand at the beginning of the period  (the inventory adjustment is simple on Schedule C).   

The question is:   which line of schedule C should I make the adjustment removing the accrued sales (aka A/R)?  

Dynamic AdsDynamic Ads
v
Privacy Settings