November 2019
The passage of the Tax Cuts and Jobs Act of 2017 (TCJA) created additional opportunities for taxpayers to choose the cash method of accounting as the definition of a small business taxpayer. Small business taxpayers are taxpayers (other than a tax shelter—see discussion below) who have an average in annual gross receipts for the previous three tax years that don’t exceed $25 million. This is an increase from the previous threshold of $5 million. If a business has not been in existence for the entire three-year period, or if any of the prior three years were short years, special rules apply.
