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. ...
Related Articles
  1. Taxes

    Safe Tax Planning For High-Net-Worth Filers

    Planning is essential for the affluent seeking tax breaks. Get to know the legal strategies for saving more.
  2. Taxes

    Small Business Tax Obligations: Payroll Taxes

    Don't leave it up to your accountant - owners are ultimately responsible for fulfilling tax obligations.
  3. Taxes

    Give To Charity; Slash Your Tax Payment

    Being generous has never been more (financially) rewarding!
  4. Taxes

    10 Most Overlooked Tax Deductions

    The receipts you cram into your wallet could be replaced with cash come tax season.
  5. Professionals

    Common Interview Questions for Financial Auditors

    Identify questions commonly asked at financial auditor job interviews, and learn to formulate winning responses that give your candidacy a boost.
  6. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  7. Insurance

    Medicare 101: Do You Need All 4 Parts?

    Medicare is the United States’ health insurance program for those over age 65. Medicare has four parts, but you might not need them all.
  8. Professionals

    4 Must Watch Films and Documentaries for Accountants

    Learn how these must-watch movies for accountants teach about the importance of ethics in a world driven by greed and financial power.
  9. Taxes

    How & Where to File Form 1040 (And Which Version)

    All taxpayers need to know three things when filing a 1040: which form to use, how to file and where to file. After reading this, you'll know all three.
  10. Active Trading

    An Introduction To Depreciation

    Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line.
  1. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
  2. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  3. Can a Flexible Spending Account (FSA) be used for Lasik?

    The owner of a Flexible Spending Account (FSA) can use money from the account on various eye surgery procedures, including ... Read Full Answer >>
  4. Does a Flexible Spending Account (FSA) cover braces?

    Funds from a Flexible Spending Account (FSA) can be used to cover costs associated with installing, maintaining and removing ... Read Full Answer >>
  5. Can a Flexible Spending Account (FSA) be used for a gym membership?

    The U.S. Internal Revenue Service (IRS) typically does not allow funds from a Flexible Spending Account (FSA) to be used ... Read Full Answer >>
  6. Can a Flexible Spending Account (FSA) be used for dental procedures?

    The U.S. Internal Revenue Service (IRS) allows funds from a Flexible Spending Account (FSA) to be used for qualified medical ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  2. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses ...
  3. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  4. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  5. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
Trading Center