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IRS issues new guidance on changing revenue method

Tammy Whitehouse | May 14, 2018

Now that companies are following new accounting methods to reflect revenue in financial statements, the Internal Revenue Service is offering new guidance on reflecting income in tax filings.

The IRS issued Revenue Procedure 2018-29 to give corporate taxpayers new procedures for changing their method of accounting for the recognition of income for federal income tax purposes. The procedure is meant to bridge the gulf that formed between tax rules and accounting rules when companies adopted a new method under GAAP to recognize revenue in financial statements.

Public companies began following a new revenue recognition standard, Accounting Standards Codification Topic 606, effective Jan. 1, 2018. Foreign private issuers adopted similar standards under International Financial Reporting Standards. Private companies are required to adopt the new GAAP standard by Jan. 1, 2019.

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