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Yuan Chou

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5 Tax Accounting Method Changes That Can Generate Savings and Cash Flow

Posted by Yuan Chou on Tue, May 25, 2021

Cash flow preservation remains an important focus for many companies as the COVID-19 pandemic continues to create uncertainty for businesses.

Accounting method changes provide a valuable opportunity for taxpayers to reduce their current tax expense and increase cash flow by accelerating deductions and/or deferring income.

Changing to an optimal method of accounting often results in a taxpayer claiming a favorable “catch-up” adjustment on the federal tax return for the year of the change, which can significantly reduce taxable income or generate a net operating loss that can be carried back to higher tax rate years.

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Topics: Business tax planning

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