Cash method what entities can use it?
Under the cash method, you include in your gross income all items of income you actually or constructively receive during the tax year. If you receive property and services, you must include their fair market value (FMV) in income.
For tax year 2021, the following
entities cannot use the cash method, or any combination that includes it:
- A corporation (not SCORP or qualified PSC) with average annual gross receipts over $26 million.
- A partnership with a corporation (other than SCORP) as a partner, and with the partnership having average annual gross receipts exceeding $26 million.
- A tax shelter.