The business is a staffing agency and is an LLC. It was started in 2015 so the tax returns for 2015 and 2016 show cash method of accounting. The returns had to be amended because the accounting books were incorrect. The 2017 is the return we want to change the accounting method. The company gross receipts were $100k in 2017 so I don't know if this is still considered a small business. All three years we reported a net loss. We invoice companies that we send employees to on a temporary basis but we give them 30 days to pay so at times cash is received in the following month which would demonstrate accrual accounting. If we can report cash accounting method on tax return and accrual accounting on books it would make it easier than to try to change accounting methods.
what method was used on the amended returns? if it was changed from cash to accrual, why? what year is the LLC on for tax reporting purposes?
if the accrual method was used on the amended returns for 2015 and 2016 you need to file for a change in accounting methods form 3115 which goes with the return that's being changed. see the instructions for where and when a signed copy must be filed. This is separate from the copy that goes with the return..
if the LLC is on a calendar year, regardless of whether it's a single or multi-member, the return is late and the accounting method change can't be done until the 2018 calendar year.
seek professional help, the form is tricky
but to answer your basic question, you apparently do not have inventories and I assume not a tax shelter so you would qualify for an automatic change (in the proper year)
tax shelter:
Yes, your business can use one method for tax returns and another method for your 'books'.
However, that MIGHT complicate things, as you will need to essentially keep two sets of records.
If you change your method on your tax return, that needs a special form (3115) and I HIGHLY advise going to a tax professional for that year.
and the confusion will be increased if you sell goods and maintain inventory and then have to do two different calculations of inventory as of the period.
Thanks. I certainly do not want to keep two sets of books. The business does not have inventory so that is something we don't have to deal with.
what method was used on the amended returns? if it was changed from cash to accrual, why? what year is the LLC on for tax reporting purposes?
if the accrual method was used on the amended returns for 2015 and 2016 you need to file for a change in accounting methods form 3115 which goes with the return that's being changed. see the instructions for where and when a signed copy must be filed. This is separate from the copy that goes with the return..
if the LLC is on a calendar year, regardless of whether it's a single or multi-member, the return is late and the accounting method change can't be done until the 2018 calendar year.
seek professional help, the form is tricky
but to answer your basic question, you apparently do not have inventories and I assume not a tax shelter so you would qualify for an automatic change (in the proper year)
tax shelter:
Thanks for the thorough answer to my question. The method used on the original returns (2015, 2016) were cash. I am in the process of doing amended returns for both years because the accounting books were improperly kept. So I wanted to put the accrual method on the amended returns but I guess I can not do this because as you stated the accounting method has to be changed in 2018. And yes the business is on a calendar year basis. There is not any inventories and it is not a tax shelter. I want to change from cash to accrual because I do not want to keep two sets of books for each method. Thanks again for your help.
Again, if you want to change your method on your tax return, you should go to a tax professional.
I am an individual. I sold a Tax Shelter this year at a large loss . Where and how do I report it ?
I am an individual. I sold a Tax Shelter this year at a large loss . Where and how do I report it .
How has the Tax Shelter loss been reported to you? In other words, what documents have you received from the Tax Shelter. If your loss involves the disclosure of a reportable transaction, such disclosure requires Form 8886 which TurboTax does not support.