By John W. Cashman, Jr., CPA
Tax Manager at Gray, Gray & Gray, LLP
The U.S. economic recovery has been spurred in many ways by the spirit of entrepreneurship that has led to an expansion of small businesses. The appeal of working for oneself and creating your own success is strong.
But running a small business also carries an increasing amount of scrutiny from the Internal Revenue Service (IRS). The financial controls present in a large corporation are not always so rigid in a closely held business. The IRS can come down hard on small companies that take advantage of “gray” areas in the tax code, or that get overly aggressive in claiming deductions.
The temporary repairs regulations, which were issued last December, will affect many businesses, regardless of what industry they cater to. Businesses have until the end of the 2013 tax year to file for a Form 3115, “Application for Change In Accounting Method,” to comply with the new complex and lengthy regulations. At the recent ABA Tax Conference, Sunita Lough, Acting Director (prefilling and technical guidance) of the IRS Large Business and International Division, provided some insight on the new regulations filing timeline. She indicated that taxpayers, who choose not to file Form 3115 in order to comply with the temporary tangible property regulations during the first year of the two year window, will not be at risk for an IRS audit as long as they do file before the end of the two years. This means that it is important for all affected businesses to file Form 3115 at some point during this two year window. Continue reading
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