Question: Rodney filed his Schedule C for 2016 and 2017 using the cash method of accounting. When filing his 2018 Schedule C, can he change his method of accounting to accrual by amending his 2016 and 2017 returns or does he need to file Form 3115 to change his method of accounting for 2018?
Answer: Rodney needs to file Form 3115 to change his method of accounting for 2018. Two returns filed in consecutive years using an improper method establishes a method of accounting for which consent to change is required. A taxpayer may not file amended returns to change such method (Rev. Rul. 90-38).
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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.