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At the time this book was completed, Congress was considering important tax changes that could affect 2017 tax returns and planning for 2018. Check the online Supplement in February 2018 at www.jklasser.com or www.barbaraweltman.com to see what changes have been enacted and when they are effective.

Once you select your form of business organization, you must decide how you will report your income. There are 2 key decisions you must make: What is the time frame for calculating your income and deductions (called the tax year or accounting period), and what are the rules that you will follow to calculate your income and deductions (called the accounting method). In some cases, as you will see, your form of business organization restricts you to an accounting period or accounting method. In other cases, however, you can choose which method is best for your business. Depending upon circumstances, you may want to need to change your accounting method. Sometimes making a change is easy, with automatic procedures; other situations require IRS consent, as you will see later in this chapter.

For a further discussion on tax years and accounting methods, see IRS Publication 538, Accounting Periods and Methods. Inventory rules are discussed in Chapter 4.