I purchased a website subscription in 2021 but it is renewed till 2023. I am cash method accounting sch c file. Can I take the entire amount in 2021?

[AmeliesUncle]

No, well, probably not.

Form 3115 would only be used if you were doing it differently (probably wrong) for at least two consecutive years.   For example, let's say that in both 2019 and 2020 you had a similar thing that you paid for something that extended past 12 months, but you incorrectly deducted the full cost in one year.    In that scenario, you might need to file Form 3115 to 'correct' things and change to doing it right for 2021.  But assuming that is not the case, no Form 3115 is needed.

[Rick19744]

Ok.  We have lost control on this question:

• I agree with @AmeliesUncle 
• As stated, in general, as a cash method taxpayer you deduct the expense when paid.
• There are exceptions for prepaid items and there is the 12-month rule.
• Cash-method taxpayers are not required to capitalize prepaid expenses that create a benefit that expires on or before the earlier of (1) 12 months after the first day on which the taxpayer realizes the benefit of the expense or (2) the end of the tax year after the year payment is made.
• Since your subscription falls outside of that 12-month period exception, you do not qualify to expense the entire amount in 2021.  You can only take a prorated amount related to the number of months in 2021.
• No change in accounting method needs to be done.

[confusedabouttaxes23]

@Rick19744 @AmeliesUncle 

My business bills have been mostly monthly or one year from date of purchase like August 2021 to August 2022 for example. I don't pay in advance because too much money upfront. When I first begin irs said cash people deduct expenses when they paid them so I went with that. I did not know about this rule. I didn't know about prorating end of year. I thought cash method means pay bill that covers a year and your paid expenses for that year. I thought prorating is for accural method pay bill in one year and keep prorating till next year. Cash method says deduct bills in year you pay them. So I don't need to file form 3115 because I don't want to change accounting method. Since my bills in 2019 and 2020 have been 1 year or less i.e. August 2019 to August 2020 means I dont need to file 3115 right because I did not prorate them from the beginning?

[AmeliesUncle]

Correct.

[confusedabouttaxes23]

@AmeliesUncle 

So in the beginning when I first began which was a while ago and I took expenses as I got them i.e. August 2019 to August 2020 I automatically accepted the 12 month rule right? Without ofcourse knowing i did. When I first began I talked to irs as these support did not exist so they never mentioned this rule. They said in the year it was paid. I thought that made sense. So basically now I don't need to fill out form 3115 right ?