The Internal Revenue Service advocates two basic forms of accounting for tax purposes. The first and most common is cash basis whereby traditional financial statements are converted to cash basis for tax reporting. The second and less common is accrual basis of tax reporting. This is a required format for larger corporations. Some industries are allowed what is referred to as Modified Tax Reporting, but this generally is not allowed in small business.
Basis is a term used in computing gains and losses on the disposition of an asset. For any business owner or individual taxpayer it is important to understand what the Internal Revenue Service (IRS) is […]