Filing a federal income tax return can cause a taxpayer to adopt a method of accounting, both in general and with respect to a specific item. Accordingly, a taxpayer needs consider what accounting methods it intends to adopt prior to filing its return. Failing to consider adoption of an accounting method may result in reporting an item under an impermissible method, the inadvertent acceleration of income, or the inadvertent deferral of deduction.
The discussion of elections and accounting methods is intended to be a general overview. Careful analysis is required regarding a particular taxpayer's specific facts to determine whether the desired change can be made automatically. Certain prerequisites for making a particular accounting method change must be satisfied.