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10 (...continued)
taxpayer used the cash method, or
(B) 4 taxable years, provided the
taxpayer complies with the provisions of
paragraph (h)(2) or (h)(3) of this section
for its first section 448 year.
(ii) Hospital timing rules--(A) In general. In the
case of a hospital that is required by this section to
change from the cash method, the section 481(a) adjustment
shall be taken into account ratably (beginning with the year
of change) over 10 years, provided the taxpayer complies
with the provisions of paragraph (h)(2) or (h)(3) of this
section for its first section 448 year.
* * * * * * *
(iii) Untimely change in method of accounting to comply
with this section. Unless a taxpayer (including a hospital
and a cooperative) required by this section to change from
the cash method complies with the provisions of paragraph
(h)(2) or (h)(3) of this section for its first section 448
year within the time prescribed by those paragraphs, the
taxpayer must take the section 481(a) adjustment into
account under the provisions of any applicable
administrative procedure that is prescribed by the
Commissioner after January 7, 1991, specifically for
purposes of complying with this section. Absent such an
administrative procedure, a taxpayer must request a change
under �1.446-1(e)(3) and shall be subject to any terms and
conditions (including the year of change) as may be imposed
by the Commissioner.
(3) Special timing rules for section 481(a) adjustment--
(i) One-third rule. If, during the period the section 481(a)
adjustment is to be taken into account, the balance of the
taxpayer's accounts receivable as of the last day of each of
two consecutive taxable years is less than 66 2/3 percent of
the taxpayer's accounts receivable balance at the beginning
of the first year of the section 481(a) adjustment, the
balance of the section 481(a) adjustment (relating to
accounts receivable) not previously taken into account shall
be included in income in the second taxable year. This
paragraph (g)(3)(i) shall not apply to any hospital * * *
(continued...)
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