As 2025 draws to a close, year-end tax planning is top of mind for many businesses. A strategic review of your tax accounting methods with Andersen can uncover opportunities to accelerate deductions, defer income to reduce cash taxes, utilize expiring net operating losses, or mitigate the effect of various provisions of the Internal Revenue Code. Making an accounting method change can also help you begin leveraging favorable tax law changes under the One Big Beautiful Bill Act (OBBBA) of 2025.

Filing Form 3115, Application for Change in Accounting Method, generally provides audit protection for the taxpayer’s prior method of accounting. This protection becomes effective upon filing the Form 3115. A four-year spread period of the Sec. 481(a) cumulative catch-up adjustment generally applies for unfavorable adjustments (increases to taxable income), while favorable adjustments (decreases to taxable income) are taken into account entirely in the year of change.

Time is of the essence for evaluating accounting method changes for 2025 and identifying which changes can be filed automatically and which changes must be filed non-automatically. Non-automatic changes must be filed by the end of the 2025 tax year (December 31, 2025, for calendar year taxpayers), while automatic changes must be filed by the timely filed (including extensions) tax return.

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