Photo by Edwin Remsberg
This post should not be construed as legal or tax advice
For those who do not know, agriculture is the only industry that the Internal Revenue Service (IRS) allows to continue using the cash accounting method for tax purposes. Cash accounting is simply recognizing income when it is received and expenses when paid. For example, Stan harvests corn in 2014 and stores a portion of his crop. Stan sells a portion of the stored crop in 2015, and would not recognize that income on his taxes till 2015. Farms may also choose to use the other accounting method -- the accrual method, used by all other industries. Accrual accounting is when you report income and expenses in the year they incur. The idea behind accrual accounting is to allow for the matching of income and expenses.
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