Tax Preparation Help  
Publication 538 2008 Tax Year

Publication 538 - Introductory Material

Every taxpayer (whether an individual or a business entity) must figure taxable income on an annual accounting period called a tax year. The calendar year is the most common tax year. Other tax years are a fiscal year and a short tax year which are discussed later.

Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the: (a) cash method; and (b) accrual method.

Under the cash method, generally you report income in the tax year in which you receive it; and you deduct expenses in the tax year in which you pay them.

Under an accrual method, generally you report income in the tax year in which you earn it, regardless of when payment is received. You deduct expenses in the tax year you incur them, regardless of when payment is made.

This publication explains some of the rules for accounting periods and accounting methods. In many cases you may have to refer to the cited sources for a fuller explanation of the topic.

This publication is not intended as a guide to general business and tax accounting rules. Section references are to the Internal Revenue Code and regulation references are to the Income Tax Regulations.

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Internal Revenue Service
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  • 537 Installment Sales

  • 541 Partnerships

  • 542 Corporations

Form (and Instructions)

  • 1128
    Application To Adopt, Change, or Retain a Tax Year

  • 3115
    Application for Change in Accounting Method

See How To Get Tax Help at the end of this publication for information about getting these publications and forms.

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