[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2273 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2273

  To amend the Internal Revenue Code of 1986 to clarify that certain 
  small businesses are permitted to use the cash method of accounting 
               even if they use merchandise or inventory.


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                    IN THE HOUSE OF REPRESENTATIVES

                             June 17, 1999

Mr. Talent (for himself and Mr. English) introduced the following bill; 
         which was referred to the Committee on Ways and Means

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                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to clarify that certain 
  small businesses are permitted to use the cash method of accounting 
               even if they use merchandise or inventory.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL BUSINESS.

    Section 446 of the Internal Revenue Code of 1986 (relating to 
general rule for methods of accounting) is amended by adding at the end 
the following new subsection:
    ``(g) Small Taxpayers Permitted To Use Cash Accounting Method 
Without Limitation.--A taxpayer shall not be required to use an accrual 
method of accounting for any taxable year by reason of using 
merchandise or inventory, if the average annual gross receipts of such 
taxpayer (or any predecessor) for the 3-year-period ending with such 
prior taxable year does not exceed $5,000,000. The rules of paragraphs 
(2) and (3) of section 448(c) shall apply for purposes of the preceding 
sentence. In the case of a C corporation or a partnership which has a C 
corporation as a partner, the first sentence of this subsection shall 
apply only if such C corporation or partnership meets the requirements 
of section 448(b)(3).''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.
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