Tax Accounting Methods

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Identify optimal tax accounting methods for timing the recognition of income and deductions.

The ever-changing political, regulatory and economic landscape for businesses brings increasing complexity — and opportunity — in determining the optimal timing of recognizing income and deductions based on a company’s industry, size and tax profile. The choice of accounting methods for numerous items throughout the tax return can have immediate and significant impact on a company’s cash flow, income and risk exposure.

Tax Accounting Benefits

Planning around accounting methods can offer the following benefits:

  • Generate potentially permanent cash tax benefits by deferral of income taxes
  • Increase benefits and/or decrease liabilities associated with other provisions, such as the interest expense limitation under section 163(j) and the Foreign-Derived Intangible Income (FDII) deduction
  • Counter rising interest rates by freeing up more cashflow and reducing debt
  • Secure IRS approval and eliminate uncertainty
  • Correct impermissible accounting methods and secure back-year audit protection
  • Strategically increase or decrease earnings and profits when analyzing foreign company accounting methods, depending on the tax posture
  • Avoid the need for additional disclosures for tax return signing purposes
  • Realize benefits without needing to restructure or make other intrusive actions

Federal Tax Accounting Capabilities

The BDO Accounting Methods practice consists of a proactive, consultative and technical team that helps clients identify and implement the most optimal tax methods of accounting. Our professionals are adept at working with complex structures in diverse industries and can navigate the scrutiny of interested counterparties, from the IRS to potential buyers. Yet our team relies on a practical approach to providing solutions that minimize risk and optimize opportunity. Our services include:

  • Accounting method studies to assess all method choices and proactively identify opportunities unique to each company
  • Revenue recognition review, planning and compliance
  • Lease structuring and accounting
  • Inventory and UNICAP (Section 263A) review, planning and compliance
  • M&A/restructuring assistance, including due diligence and transaction cost analysis for deductibility versus capitalization
  • Permanent deduction analysis and optimization:
    • Meals and entertainment
    • Lobbying expenses
    • Fines, penalties and other amounts
    • Foreign-Derived Intangible Income (FDII)

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BDO's Total Tax Approach

Combining our deep technical knowledge and global reach with emerging technologies, we work collaboratively to address your tax reporting obligations, transform your tax operations, and identify opportunities across your total tax footprint.

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Federal Tax Accounting Insights

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