Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Irs Form 4868

2010 Tax Return FormsFree Income Tax SoftwareFree Electronic Tax Filing2012 Tax Return Forms2010 Tax TablesTaxes 20122012 Irs 1040ez InstructionsWhere To File Free State Taxes2014 1040ez FormDo I File Amended ReturnTax Planning Us 1040ezAmended Returns2009 Freetaxusa1040ez WorksheetIrs Income Tax Forms 2011Turbotax 1040xHow Do I File My 2010 Taxes For Free2011 1040ez Form2012 Ez Tax FormFiling My 2012 TaxesHow To Amend 1040ez Tax FormWww Irs Gov 1040x FormFile Federal And State Taxes Free OnlineI Need To File My Taxes For 2011Income Tax Return 2013Instruction Booklet For 1040xCompare Tax SoftwareFree State ReturnTax Forms 1040 EzI Need The 1040x FormFile State TaxesH&r Block Military Tax ReturnIrs Extension FormsFiling A 1040x Amended Tax ReturnFree Federal TaxesFree Online Tax Extension FormState Income Tax Help2013 Form 1040ez1040 EsE File State And Federal Taxes For Free

Irs Form 4868

Irs form 4868 Publication 3402 - Additional Material Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Centro Informativo para Agricultores

 

 

English

Declarar ingresos y gastos de granjas y fincas
Para educar a contribuyentes acerca de sus obligaciones de presentación, este informe destaca fuentes de ingresos y gastos deducibles de granjeros.

¿Contratista independiente (trabajador por cuenta propia) o empleado?
Es crítico que usted, el empleador, determine correctamente si los individuos que le proporcionan servicios son empleados o contratistas independientes.

Impuesto sobre el uso de las carreteras y combustible - Consejos tributarios relacionados con la agricultura
Usted podría reunir los requisitos para reclamar un crédito o un reembolso de impuestos indirectos (excise tax) sobre combustible utilizado en una granja con propósitos agrícolas.
 

Tema Tributario 416, Ingreso Agropecuario y de Pesca
Ingresos y gastos de actividades agropecuarias se informan en el Anexo F del Formulario 1040.

Información y Recursos para Pequeñas Empresas
Información y recursos para dueños de pequeños negocios. Infórmese sobre sus obligaciones tributarias.

Trabajadores Agrícolas Extranjeros 

Los trabajadores agrícolas extranjeros, admitidos temporalmente en los Estados Unidos con un visado H-2A, están exentos de los impuestos estadounidenses de Seguro Social y Medicare, sobre la paga que reciban por servicios realizados en conexión con el visado H-2A. Es así, si son extranjeros residentes o extranjeros no residentes. 

 

Recursos adicionales en inglés

 

Agriculture Tax Center (Centro Tributario Agrícola)
En esta página podrá leer consejos tributarios útiles. Además encontrará información sobre muchos temas incluyendo: pagos de seguro agrícola, pagos tributables, ingreso de su granja y muchos más.

Page Last Reviewed or Updated: 29-Nov-2013

The Irs Form 4868

Irs form 4868 2. Irs form 4868   Accounting Methods Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Accounting MethodsCash Method Accrual Method Farm Inventory Cash Versus Accrual Method Special Methods of Accounting Combination Method Changes in Methods of Accounting Introduction You must use an accounting method that clearly shows your income and expenses. Irs form 4868 You must also figure your taxable income and file an income tax return for an annual accounting period called a tax year. Irs form 4868 This chapter discusses accounting methods. Irs form 4868 For information on accounting periods, see Publication 538, Accounting Periods and Methods, and the Instructions for Form 1128, Application To Adopt, Change, or Retain a Tax Year. Irs form 4868 Topics - This chapter discusses: Cash method Accrual method Farm inventory Special methods of accounting Changes in methods of accounting Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 535 Business Expenses Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 3115 Application for Change in Accounting Method See chapter 16 for information about getting publications and forms. Irs form 4868 Accounting Methods An accounting method is a set of rules used to determine when and how your income and expenses are reported on your tax return. Irs form 4868 Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. Irs form 4868 A material item is one that affects the proper time for inclusion of income or allowance of a deduction. Irs form 4868 An item considered material for financial statement purposes is generally also considered material for income tax purposes. Irs form 4868 See Publication 538 for more information. Irs form 4868 You generally choose an accounting method for your farm business when you file your first income tax return that includes a Schedule F (Form 1040), Profit or Loss From Farming. Irs form 4868 If you later want to change your accounting method, you generally must get IRS approval. Irs form 4868 How to obtain IRS approval is discussed later under Changes in Methods of Accounting . Irs form 4868 Types of accounting methods. Irs form 4868   Generally, you can use any of the following accounting methods. Irs form 4868 Each method is discussed in detail below. Irs form 4868 Cash method. Irs form 4868 Accrual method. Irs form 4868 Special methods of accounting for certain items of income and expenses. Irs form 4868 Combination (hybrid) method using elements of two or more of the above. Irs form 4868 Business and other items. Irs form 4868   You can account for business and personal items using different accounting methods. Irs form 4868 For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. Irs form 4868 Two or more businesses. Irs form 4868   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. Irs form 4868 Generally, no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. Irs form 4868 Cash Method Most farmers use the cash method because they find it easier to keep records using the cash method. Irs form 4868 However, certain farm corporations and partnerships and all tax shelters must use an accrual method of accounting. Irs form 4868 See Accrual Method Required , later. Irs form 4868 Income Under the cash method, include in your gross income all items of income you actually or constructively received during the tax year. Irs form 4868 Items of income include money received as well as property or services received. Irs form 4868 If you receive property or services, you must include the fair market value (FMV) of the property or services in income. Irs form 4868 See chapter 3 for information on how to report farm income on your income tax return. Irs form 4868 Constructive receipt. Irs form 4868   Income is constructively received when an amount is credited to your account or made available to you without restriction. Irs form 4868 You do not need to have possession of the income for it to be treated as income for the tax year. Irs form 4868 If you authorize someone to be your agent and receive income for you, you are considered to have received the income when your agent receives it. Irs form 4868 Income is not constructively received if your receipt of the income is subject to substantial restrictions or limitations. Irs form 4868 Direct payments and counter-cyclical payments. Irs form 4868   If you received direct payments or counter-cyclical payments under Subtitle A or C of the Farm Security and Rural Investment Act of 2002, you will not be considered to have constructively received a payment merely because you had the option to receive it in the year before it is required to be paid. Irs form 4868 Delaying receipt of income. Irs form 4868   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. Irs form 4868 You must report the income in the year the money or property is received or made available to you without restriction. Irs form 4868 Example. Irs form 4868 Frances Jones, a farmer, was entitled to receive a $10,000 payment on a grain contract in December 2013. Irs form 4868 She was told in December that her payment was available. Irs form 4868 She requested not to be paid until January 2014. Irs form 4868 However, she must still include this payment in her 2013 income because it was made available to her in 2013. Irs form 4868 Debts paid by another person or canceled. Irs form 4868   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. Irs form 4868 If you receive income in this way, you constructively receive the income when the debt is canceled or paid. Irs form 4868 See Cancellation of Debt in chapter 3. Irs form 4868 Deferred payment contract. Irs form 4868   If you sell an item under a deferred payment contract that calls for payment in a future year, there is no constructive receipt in the year of sale. Irs form 4868 However, if the sales contract states that you have the right to the proceeds of the sale from the buyer at any time after delivery of the item, then you must include the sales price in income in the year of the sale, regardless of when you actually receive payment. Irs form 4868 Example. Irs form 4868 You are a farmer who uses the cash method and a calendar tax year. Irs form 4868 You sell grain in December 2013 under a bona fide arm's-length contract that calls for payment in 2014. Irs form 4868 You include the proceeds from the sale in your 2014 gross income since that is the year payment is received. Irs form 4868 However, if the contract states that you have the right to the proceeds from the buyer at any time after the grain is delivered, you must include the sales price in your 2013 income, regardless of when you actually receive payment. Irs form 4868 Repayment of income. Irs form 4868   If you include an amount in income and in a later year you have to repay all or part of it, then you can usually deduct the repayment in the year repaid. Irs form 4868 If the repayment is more than $3,000, a special rule applies. Irs form 4868 For details, see Repayments in chapter 11 of Publication 535, Business Expenses. Irs form 4868 Expenses Under the cash method, generally you deduct expenses in the tax year you pay them. Irs form 4868 This includes business expenses for which you contest liability. Irs form 4868 However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained under Uniform Capitalization Rules in chapter 6. Irs form 4868 See chapter 4 for information on how to deduct farm business expenses on your income tax return. Irs form 4868 Prepayment. Irs form 4868   Generally, you cannot deduct expenses paid in advance. Irs form 4868 This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Irs form 4868 Example. Irs form 4868 On November 1, 2013, you signed and paid $3,600 for a 3-year (36-month) insurance contract for equipment. Irs form 4868 In 2013, you are allowed to deduct only $200 (2/36 x $3,600) of the cost of the policy that is attributable to 2013. Irs form 4868 In 2014, you'll be able to deduct $1,200 (12/36 x $3,600); in 2015, you'll be able to deduct $1,200 (12/36 x $3,600); and in 2016 you'll be able to deduct the remaining balance of $1,000. Irs form 4868 An exception applies if the expense qualifies for the 12-month rule. Irs form 4868 See Publication 538 for more information and examples. Irs form 4868 See chapter 4 for special rules for prepaid farm supplies and prepaid livestock feed. Irs form 4868 Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. Irs form 4868 The purpose of an accrual method of accounting is to correctly match income and expenses. Irs form 4868 Certain businesses engaged in farming must use an accrual method of accounting for its farm business and for sales and purchases of inventory items. Irs form 4868 See Accrual Method Required and Farm Inventory , later. Irs form 4868 Income Generally, you include an amount in income for the tax year in which all events that fix your right to receive the income have occurred, and you can determine the amount with reasonable accuracy. Irs form 4868 Under this rule, include an amount in income on the earliest of the following dates. Irs form 4868 When you receive payment. Irs form 4868 When the income amount is due to you. Irs form 4868 When you earn the income. Irs form 4868 When title passes. Irs form 4868 If you use an accrual method of accounting, complete Part III of Schedule F (Form 1040) to report your income. Irs form 4868 Inventory. Irs form 4868   If you keep an inventory, generally you must use an accrual method of accounting to determine your gross income. Irs form 4868 An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. Irs form 4868 See Publication 538 for more information. Irs form 4868 Also see Farm Inventory , later, for more information on items that must be included in inventory by farmers and inventory valuation methods for farmers. Irs form 4868 Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both of the following apply. Irs form 4868 The all-events test has been met. Irs form 4868 This test is met when: All events have occurred that fix the fact that you have a liability, and The amount of the liability can be determined with reasonable accuracy. Irs form 4868 Economic performance has occurred. Irs form 4868 Economic performance. Irs form 4868   Generally, you cannot deduct or capitalize a business expense until economic performance occurs. Irs form 4868 If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. Irs form 4868 If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Irs form 4868 Example. Irs form 4868 Jane, who is a farmer, uses a calendar tax year and an accrual method of accounting. Irs form 4868 She entered into a contract with ABC Farm Consulting in 2012. Irs form 4868 The contract stated that Jane pay ABC Farm Consulting $2,000 in December 2012. Irs form 4868 It further stipulates that ABC Farm Consulting will develop a plan for integrating her farm with a larger farm operation based in a neighboring state by March 1, 2013. Irs form 4868 Jane paid ABC Farm Consulting $2,000 in December 2012. Irs form 4868 Integration of operations according to the plan began in May 2013 and they completed the integration in December 2013. Irs form 4868 Economic performance for Jane's liability in the contract occurs as the services are provided. Irs form 4868 Jane incurs the $2,000 cost in 2013. Irs form 4868 An exception to the economic performance rule allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. Irs form 4868 For more information, see Economic Performance in Publication 538. Irs form 4868 Special rule for related persons. Irs form 4868   Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. Irs form 4868 Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. Irs form 4868 For more information, see Internal Revenue Code section 267. Irs form 4868 Accrual Method Required Generally, the following businesses, if engaged in farming, must use an accrual method of accounting. Irs form 4868 A corporation (other than a family corporation) that had gross receipts of more than $1,000,000 for any tax year beginning after 1975. Irs form 4868 A family corporation that had gross receipts of more than $25,000,000 for any tax year beginning after 1985. Irs form 4868 A partnership with a corporation as a partner, if that corporation meets the requirements of (1) or (2) above. Irs form 4868 A tax shelter. Irs form 4868 Note. Irs form 4868 Items (1), (2), and (3) above do not apply to an S corporation or a business operating a nursery or sod farm, or the raising or harvesting of trees (other than fruit and nut trees). Irs form 4868 Family corporation. Irs form 4868   A family corporation is generally a corporation that meets one of the following ownership requirements. Irs form 4868 Members of the same family own at least 50% of the total combined voting power of all classes of stock entitled to vote and at least 50% of the total shares of all other classes of stock of the corporation. Irs form 4868 Members of two families have owned, directly or indirectly, since October 4, 1976, at least 65% of the total combined voting power of all classes of voting stock and at least 65% of the total shares of all other classes of the corporation's stock. Irs form 4868 Members of three families have owned, directly or indirectly, since October 4, 1976, at least 50% of the total combined voting power of all classes of voting stock and at least 50% of the total shares of all other classes of the corporation's stock. Irs form 4868 For more information on family corporations, see Internal Revenue Code section 447. Irs form 4868 Tax shelter. Irs form 4868   A tax shelter is a partnership, noncorporate enterprise, or S corporation that meets either of the following tests. Irs form 4868 Its principal purpose is the avoidance or evasion of federal income tax. Irs form 4868 It is a farming syndicate. Irs form 4868 A farming syndicate is an entity that meets either of the following tests. Irs form 4868 Interests in the activity have been offered for sale in an offering required to be registered with a federal or state agency with the authority to regulate the offering of securities for sale. Irs form 4868 More than 35% of the losses during the tax year are allocable to limited partners or limited entrepreneurs. Irs form 4868   A “limited partner” is one whose personal liability for partnership debts is limited to the money or other property the partner contributed or is required to contribute to the partnership. Irs form 4868   A “limited entrepreneur” is one who has an interest in an enterprise other than as a limited partner and does not actively participate in the management of the enterprise. Irs form 4868 Farm Inventory If you are required to keep an inventory, you should keep a complete record of your inventory as part of your farm records. Irs form 4868 This record should show the actual count or measurement of the inventory. Irs form 4868 It should also show all factors that enter into its valuation, including quality and weight, if applicable. Irs form 4868 Hatchery business. Irs form 4868   If you are in the hatchery business, and use an accrual method of accounting, you must include in inventory eggs in the process of incubation. Irs form 4868 Products held for sale. Irs form 4868   All harvested and purchased farm products held for sale or for feed or seed, such as grain, hay, silage, concentrates, cotton, tobacco, etc. Irs form 4868 , must be included in inventory. Irs form 4868 Supplies. Irs form 4868   Supplies acquired for sale or that become a physical part of items held for sale must be included in inventory. Irs form 4868 Deduct the cost of supplies in the year used or consumed in operations. Irs form 4868 Do not include incidental supplies in inventory as these are deductible in the year of purchase. Irs form 4868 Livestock. Irs form 4868   Livestock held primarily for sale must be included in inventory. Irs form 4868 Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory. Irs form 4868 See also Unit-livestock-price method , later. Irs form 4868 If you are in the business of breeding and raising chinchillas, mink, foxes, or other fur-bearing animals, these animals are livestock for inventory purposes. Irs form 4868 Growing crops. Irs form 4868   Generally, growing crops are not required to be included in inventory. Irs form 4868 However, if the crop has a preproductive period of more than 2 years, you may have to capitalize (or include in inventory) costs associated with the crop. Irs form 4868 See Uniform capitalization rules below. Irs form 4868 Also see Uniform Capitalization Rules in  chapter 6. Irs form 4868 Items to include in inventory. Irs form 4868   Your inventory should include all items held for sale, or for use as feed, seed, etc. Irs form 4868 , whether raised or purchased, that are unsold at the end of the year. Irs form 4868 Uniform capitalization rules. Irs form 4868   The following applies if you are required to use an accrual method of accounting. Irs form 4868 The uniform capitalization rules apply to all costs of raising a plant, even if the preproductive period of raising a plant is 2 years or less. Irs form 4868 The costs of animals are subject to the uniform capitalization rules. Irs form 4868 Inventory valuation methods. Irs form 4868   The following methods, described below, are those generally available for valuing inventory. Irs form 4868 The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Irs form 4868 Cost. Irs form 4868 Lower of cost or market. Irs form 4868 Farm-price method. Irs form 4868 Unit-livestock-price method. Irs form 4868 Cost and lower of cost or market methods. Irs form 4868   See Publication 538 for information on these valuation methods. Irs form 4868 If you value your livestock inventory at cost or the lower of cost or market, you do not need IRS approval to change to the unit-livestock-price method. Irs form 4868 However, if you value your livestock inventory using the farm-price method, then you must obtain permission from the IRS to change to the unit-livestock-price method. Irs form 4868 Farm-price method. Irs form 4868   Under this method, each item, whether raised or purchased, is valued at its market price less the direct cost of disposition. Irs form 4868 Market price is the current price at the nearest market in the quantities you usually sell. Irs form 4868 Cost of disposition includes broker's commissions, freight, hauling to market, and other marketing costs. Irs form 4868 If you use this method, you must use it for your entire inventory, except that livestock can be inventoried under the unit-livestock-price method. Irs form 4868 Unit-livestock-price method. Irs form 4868   This method recognizes the difficulty of establishing the exact costs of producing and raising each animal. Irs form 4868 You group or classify livestock according to type and age and use a standard unit price for each animal within a class or group. Irs form 4868 The unit price you assign should reasonably approximate the normal costs incurred in producing the animals in such classes. Irs form 4868 Unit prices and classifications are subject to approval by the IRS on examination of your return. Irs form 4868 You must annually reevaluate your unit livestock prices and adjust the prices upward or downward to reflect increases or decreases in the costs of raising livestock. Irs form 4868 IRS approval is not required for these adjustments. Irs form 4868 Any other changes in unit prices or classifications do require IRS approval. Irs form 4868   If you use this method, include all raised livestock in inventory, regardless of whether they are held for sale or for draft, breeding, sport, or dairy purposes. Irs form 4868 This method accounts only for the increase in cost of raising an animal to maturity. Irs form 4868 It does not provide for any decrease in the animal's market value after it reaches maturity. Irs form 4868 Also, if you raise cattle, you are not required to inventory hay you grow to feed your herd. Irs form 4868   Do not include sold or lost animals in the year-end inventory. Irs form 4868 If your records do not show which animals were sold or lost, treat the first animals acquired as sold or lost. Irs form 4868 The animals on hand at the end of the year are considered those most recently acquired. Irs form 4868   You must include in inventory all livestock purchased primarily for sale. Irs form 4868 You can choose either to include in inventory or depreciate livestock purchased for draft, breeding, sport or dairy purposes. Irs form 4868 However, you must be consistent from year to year, regardless of the method you have chosen. Irs form 4868 You cannot change your method without obtaining approval from the IRS. Irs form 4868   You must include in inventory animals purchased after maturity or capitalize them at their purchase price. Irs form 4868 If the animals are not mature at purchase, increase the cost at the end of each tax year according to the established unit price. Irs form 4868 However, in the year of purchase, do not increase the cost of any animal purchased during the last 6 months of the year. Irs form 4868 This “no increase” rule does not apply to tax shelters which must make an adjustment for any animal purchased during the year. Irs form 4868 It also does not apply to taxpayers that must make an adjustment to reasonably reflect the particular period in the year in which animals are purchased, if necessary to avoid significant distortions in income. Irs form 4868 Uniform capitalization rules. Irs form 4868   A farmer can determine costs required to be allocated under the uniform capitalization rules by using the farm-price or unit-livestock-price inventory method. Irs form 4868 This applies to any plant or animal, even if the farmer does not hold or treat the plant or animal as inventory property. Irs form 4868 Cash Versus Accrual Method The following examples compare the cash and accrual methods of accounting. Irs form 4868 Example 1. Irs form 4868 You are a farmer who uses an accrual method of accounting. Irs form 4868 You keep your books on the calendar year basis. Irs form 4868 You sell grain in December 2013 but you are not paid until January 2014. Irs form 4868 Because the accrual method was used and 2013 was the tax year in which the grain was sold, you must both include the sales proceeds and deduct the costs incurred in producing the grain on your 2013 tax return. Irs form 4868 Example 2. Irs form 4868 Assume the same facts as in Example 1 except that you use the cash method and there was no constructive receipt of the sales proceeds in 2013. Irs form 4868 Under this method, you include the sales proceeds in income for 2014, the year you receive payment. Irs form 4868 Deduct the costs of producing the grain in the year you pay for them. Irs form 4868 Special Methods of Accounting There are special methods of accounting for certain items of income and expense. Irs form 4868 Crop method. Irs form 4868   If you do not harvest and dispose of your crop in the same tax year that you plant it, you can, with IRS approval, use the crop method of accounting. Irs form 4868 You cannot use the crop method for any tax return, including your first tax return, unless you receive approval from the IRS. Irs form 4868 Under this method, you deduct the entire cost of producing the crop, including the expense of seed or young plants, in the year you realize income from the crop. Irs form 4868    See chapter 4 for details on deducting the costs of operating a farm. Irs form 4868 Also see Regulations section 1. Irs form 4868 162-12. Irs form 4868 Other special methods. Irs form 4868   Other special methods of accounting apply to the following items. Irs form 4868 Amortization, see chapter 7. Irs form 4868 Casualties, see chapter 11. Irs form 4868 Condemnations, see chapter 11. Irs form 4868 Depletion, see chapter 7. Irs form 4868 Depreciation, see chapter 7. Irs form 4868 Farm business expenses, see chapter 4. Irs form 4868 Farm income, see chapter 3. Irs form 4868 Installment sales, see chapter 10. Irs form 4868 Soil and water conservation expenses, see chapter 5. Irs form 4868 Thefts, see chapter 11. Irs form 4868 Combination Method Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. Irs form 4868 However, the following restrictions apply. Irs form 4868 If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. Irs form 4868 If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. Irs form 4868 Changes in Methods of Accounting A change in your method of accounting includes a change in: Your overall method, such as from the cash method to an accrual method, and Your treatment of any material item, such as a change in your method of valuing inventory (for example, a change from the farm-price method to the unit-livestock-price method, discussed earlier). Irs form 4868 Generally, once you have set up your accounting method, you must receive approval from the IRS before you can change to another method of accounting. Irs form 4868 You may also have to pay a fee. Irs form 4868 To obtain approval, you must generally file Form 3115. Irs form 4868 There are instances when you can obtain automatic consent to change certain methods of accounting. Irs form 4868 See the List of Automatic Accounting Method Changes located in the Instructions for Form 3115. Irs form 4868 For more information on changes in methods of accounting, see Form 3115 and the Instructions for Form 3115. Irs form 4868 Also see Publication 538. Irs form 4868 Prev  Up  Next   Home   More Online Publications