IRS Publication 538


DEFINITION of 'IRS Publication 538'

A document published by the Internal Revenue Service (IRS) that details the different commonly recognized accounting methods. The IRS requires taxpayers to use a consistent accounting method when reporting income. All income, regardless of source or type of taxpayer (individual or business), is reported according to a tax year.

BREAKING DOWN 'IRS Publication 538'

The most common accounting methods are cash accounting and accrual accounting. The cash method of accounting has the taxpayer report income in the year that it was received, while the accrual method has the taxpayer report income in the year that income was earned, although it may not be received during that tax year.

If a calendar year is adopted as the filing year it must continue to be used even if the taxpayer incorporates, enters a partnership or becomes a sole-proprietor. Special permission must be granted by the IRS to change the filing schedule.

  1. Cash Accounting

    An accounting method where receipts are recorded during the period ...
  2. Income Tax

    A tax that governments impose on financial income generated by ...
  3. Calendar Year

    The one-year period that begins on January 1 and ends on December ...
  4. Accounting Period

    The time span in which certain financial events took place. The ...
  5. Accrual Accounting

    Accrual accounting is an accounting method that measures the ...
  6. Tax Year

    The period of time which is covered by a particular tax return. ...
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