New NAE Accounting Method Safe Harbor Announced


Revenue Procedure 2011-46 provides a book safe harbor method of accounting for taxpayers using the nonaccrual-experience (NAE) method of accounting under § 448(d)(5) of the Internal Revenue Code and § 1.448-2 of the Income Tax Regulations.

In general, under the NAE book safe harbor method, taxpayers within the scope of the revenue procedure may compute its uncollectible amount by multiplying the portion of the year-end allowance for doubtful accounts on the taxpayer’s applicable financial statement that is attributable to current year NAE-eligible accounts receivable by 95 percent. Rev. Proc. 2011-46 also provides procedures for obtaining automatic consent to change to the NAE book safe harbor method and to make certain changes within the NAE book safe harbor method.  

Revenue Procedure 2011-46 will be in Internal Revenue Bulletin 2011-42 on Oct. 17, 2011.

 

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 ©2011 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.

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About Cynthia Marcotte Stamer

Management attorney and operations consultant Cynthia Marcotte Stamer uses a client objective oriented approach to help businesses, governments, associations and their leaders manage performance, operations and risks.
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