Ross Company is a C corporation providing property management services. Ross has used the cash method...

 

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Ross Company is a C corporation providing property management services. Ross has used the cash method since inception because its gross receipts did not exceed $26,000,000. This year its average annual gross receipts for the prior three years crossed the $26,000,000 mark, requiring Ross to change from the cash method to the accrual method. At the end of its prior year, Ross had accounts receivable of $850,000 and accounts payable of $540,000. a. What adjustment to taxable income must Ross make due to the change in accounting method? The 481(a) adjustment includes an increase of $ This is a positive for a net adjustment of and a decrease of $ adjustment, meaning that it will increase Ross Company's taxable income. Feedback Check My Work The taxpayer, in effect, makes an election to use a particular accounting method when an initial tax return is filed using that method. If a subsequent change in method is desired, the taxpayer must obtain the permission of the IRS. b. When must Ross include this adjustment in its income? Ross Company is a C corporation providing property management services. Ross has used the cash method since inception because its gross receipts did not exceed $26,000,000. This year its average annual gross receipts for the prior three years crossed the $26,000,000 mark, requiring Ross to change from the cash method to the accrual method. At the end of its prior year, Ross had accounts receivable of $850,000 and accounts payable of $540,000. a. What adjustment to taxable income must Ross make due to the change in accounting method? The 481(a) adjustment includes an increase of $ This is a positive for a net adjustment of and a decrease of $ adjustment, meaning that it will increase Ross Company's taxable income. Feedback Check My Work The taxpayer, in effect, makes an election to use a particular accounting method when an initial tax return is filed using that method. If a subsequent change in method is desired, the taxpayer must obtain the permission of the IRS. b. When must Ross include this adjustment in its income?