I am required (by income level) to change accounting method of the business from cash to accrual. Business exists since 2002. Income adjustmen caused by this change is additional 460,000 according to Section 481. I am allowed to spread it over 4 years. But I can not find an answer if it has to be equaly divided by 4 and added to each year? Can I choose the amount of adjustment for each of the 4 years? All the examples I am finding showing an EQUAL spread, but I can not find any procedure, case, or anything else telling exacltly.
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http://ftp.resource.org/courts.gov/c/F3/348/348.F3d.136.01-1810.html
Accepted Answer"As discussed supra, Section 448(d)(7) of the Internal Revenue Code governs the Section 481 adjustment that taxpayers make where they have been required to change accounting method. Section 448(d)(7) states that the change will be treated as initiated by the taxpayer with the consent of the Secretary and that the period for taking into account the adjustment shall not exceed four years ..."
There would appear to be leeway as to the allocation, although I would recommend trying to establish accrual patterns and then maintaining them.
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