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IRS INCREASES AVAILABILITY OF CASH BASIS

December 12, 2001

The IRS has made it possible for more taxpayers to operate on a cash basis. In Notice 2001-76, the IRS says taxpayers with average annual gross receipts under $10,000,000 over the last three years will be able to change to the cash method of accounting without advance permission from IRS. This applies to businesses OTHER THAN C corporations , Retailers, Wholesalers, Manufacturers and Publishers. It is available for C corporations with average annual gross receipts under $5,000,000.

As a result of this procedure, S corporation banks, service businesses, construction subcontractors and others may be able to qualify for an automatic method change for their current tax year. This procedure, which applies to tax years ending 12/31/2001 and afterwards, is made with the tax return for the year of change.

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