Cash vs. Accrual Accounting – Impact of Proposed Changes
Congress is considering a proposal that would require the use of accrual accounting for tax purposes by agricultural operations with more than $10 million in aggregated gross receipts.
The proposed reporting changes will impact the ability of producers to:
- manage year-to-year risk
- build working capital, and
- create long-term stability for their operations
For decades, ag businesses have used cash-basis accounting for tax purposes to balance out price volatility and help manage their operations consistent with their cash flow.