Section 3: 10–20%T12
Accounting Methods and Timing Strategies
Exam Insight
The accounting method and the timing of income and deductions control when tax is paid, and the AICPA tests the cash-versus-accrual choice, the small-business gross-receipts test that exempts taxpayers from UNICAP, the section 163(j) interest limitation, and percentage-of-completion, plus method changes on Form 3115 and timing tools like installment sales and bonus depreciation versus section 179.
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What AICPA Wants You to Know
- 1Compare the cash and accrual methods and determine which taxpayers may use cash.
- 2Apply the small-business gross-receipts test and identify the exemptions it unlocks (UNICAP/263A, 163(j), and POC).
- 3Explain how to change accounting methods using Form 3115 and the section 481(a) adjustment.
- 4Apply the installment method to defer gain on the sale of property.
- 5Compare bonus depreciation and the section 179 election as income-deferral or acceleration tools.
- 6Plan the timing of income and deductions to optimize tax across years.