There are numerous instances in which small businesses receive tax-favored treatment compared with their larger counterparts. For the most part, the definition of “small business” for each tax break varies; the definition can turn on the amount of gross receipts, the amount of assets, or the number of employees. Recent Internal Revenue Service (IRS) pronouncements have created a number of new areas of relief specifically for small businesses.
Simplified Method
Regulations for tangible property (T.D. 9636) (referred to as the repair regulations) and certain dispositions of property (T.D. 9689) that became final for tax years beginning on or after Jan. 1, 2014, may require businesses to change their method of accounting. Usually this means filing Form 3115 (with a return for automatic relief or with the IRS to request relief in non-automatic situations). Fortunately, the IRS has provided relief to small businesses making changes in accounting methods under these regulations (Rev. Proc. 2015-20; IR-2015-29, Feb. 3, 2015). They do not have to file Form 3115 or any other formal election for a change in accounting under these final regulations. Instead, they simply implement them on their tax return.
