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 gets paid, and the AICPA tests the cash-versus-accrual choice, the small-business gross-receipts test that frees taxpayers from UNICAP, the section 163(j) interest limit, and percentage-of-completion, plus method changes on Form 3115 and timing tools like installment sales and bonus depreciation versus section 179.
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.
Patterns in this topic
The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.
The Timing and Method PlanControl when income lands: spread installment gain by gross-profit percentage, use the gross-receipts test to unlock exemptions, and spread a positive 481(a).The Cost Recovery PlanStack the write-offs in order: section 179 first (income-capped), then 100 percent bonus (can create a loss), then MACRS on any basis left.
Exam tip
Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.