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Level 3
posted Sep 13, 2022 2:12:36 PM

Schedule B 1120S

Hello,

 

The first question on Schedule B of 1120S mentions the accounting method (accrual, cash, other). Is this based off of your books or is it asking what method to use when paying tax? If my books are accrual and I want to be a cash basis taxpayer do I mark accrual for that question and convert to cash as an adjustment on the return?

 

Thanks

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1 Best answer
Level 15
Sep 13, 2022 2:38:06 PM

See https://www.irs.gov/publications/p538#en_US_202112_publink1000270638

 

  • A cash basis taxpayer reports income when it is actually received, and reports expenses when they are paid. The majority of people who file individual income tax returns are cash basis taxpayers.
  • Accrual basis taxpayers compute income when they actually earn it or became entitled to it. Their deductions are computed based on when those debts were incurred, but not necessarily paid.

2 Replies
Level 15
Sep 13, 2022 2:38:06 PM

See https://www.irs.gov/publications/p538#en_US_202112_publink1000270638

 

  • A cash basis taxpayer reports income when it is actually received, and reports expenses when they are paid. The majority of people who file individual income tax returns are cash basis taxpayers.
  • Accrual basis taxpayers compute income when they actually earn it or became entitled to it. Their deductions are computed based on when those debts were incurred, but not necessarily paid.

Level 15
Sep 14, 2022 1:26:15 AM

you check the box for the accounting method used to determine taxable income/loss on page 1 of the return