How do I figure whether to use Cash or Accrual when I do the accounting/taxes for our Partnership? We flip homes & report expenses when we sell the home on 1 tax return.

Mark21 · ‎June 4, 2019

Partnership formed in 2014 and submitted a zero transactions 1065 tax return for 2014. However, the 2014 tax return stated we used the "Cash" accounting method. Now that we have transactions in 2015, not sure whether we should state we are using "Cash" or "Accrual?" Since we recognize the expenses when the home is sold, is this "Cash" or "Accrual?" Seems like it is sort of both, and yet neither!

Bottomline is twofold:

Are we Cash or Accrual?
If we are not Cash and had no transactions in 2014, do I need to submit a 3115 to accomplish this?

Thank you for your help!
Mark

How do I figure whether to use Cash or Accrual when I do the accounting/taxes for our Partnership? We flip homes &amp; report expenses when we sell the home on 1 tax return.

How do I figure whether to use Cash or Accrual when I do the accounting/taxes for our Partnership? We flip homes & report expenses when we sell the home on 1 tax return.