What Is IRS Publication 538?

IRS Publication 538 is a document published by the Internal Revenue Service (IRS) that details the various commonly recognized 澳洲幸运5官方开奖结果体彩网:accounting methods and periods, who they apply to, and how to abide by them. The IRS requires taxpayers to use a consistent and standardized acco🌳unting approach when reporting income and taxation and Publication 538 serves as a basic guide on how each of them work.

Understanding IRS Publication 538

IRS Publication 538 explains some of the rules for accountin🍬g periods and standard accounting methods. It provides a b𒁏asic overview and, in some cases, you may have to refer to other sources for a more in-depth explanation of the topic.

Accounting Periods

Every taxpayer (individuals, business entities, etc.) must figure out their taxable income for an annual accounting period called a tax year. The calendar year—Jan. 1 to Dec. 31—is the most common tax year, but other tax years may include a 澳洲幸运5官方开奖结果体彩网:fiscal year (FY) and a short tax year.

If a calendar year is adopted as the filing year it must continue to be used even if the taxpayer 澳洲幸运5官方开奖结果体彩网:incorporates, enters a 澳洲幸运5官方开奖结果体彩网:partnership, or becomes a sole-proprietor. Special permission must be granted by the IRS to change the filing schedule.

Accounting Methods

Each taxpayer, whether they are an individual, a household, or a corporation, must also use a consistent and standardized accounting method, which is a set of rules for determining when to report income and expenses, and how✤ to d🔯o so. The most commonly used accounting methods are:

• The cash method: Under the 澳洲幸运5官方开奖结果体彩网:cash method, you generally report income in the tax year that you receive it, and then deduct expenses in the tax year in which you pay them.
• The accrual method: Under the 澳洲幸运5官方开奖结果体彩网:accrual method, meanwhile, you generally report income in the tax year that you earn it, regardless of when payment is received—and deduct expenses in the tax year you incur them, regardless of when payment is made.

Like the filing schedule, once you choose an accounting method, you will need to follow it consistently and apply for permission from the IRS in order to change the method or basis of accounting.

Special Considerations

Publication 538 is periodically revised. The latest upd🅠ates, reflecting new legislation or other fresh developments, can be accessed by visiting: .