“This tax reform legislation would simplify, for small and medium-sized businesses and their owners, certain accounting rules and key parts of the Internal Revenue Code,” Annette Nellen, CPA, CGMA, Esq., chair of the AICPA Tax Executive Committee, wrote in the June 22 letter (attached).  “The AICPA supports the INVEST Act of 2017.”

Nellen explained that “many of the provisions in the INVEST Act, such as the expansion of the deduction for start-up and organizational expenses, the expensing of inventory by small and mid-sized businesses, and the exception for small and mid-sized businesses from capitalization of certain costs to inventory, would contribute to simplifying the tax rules and encourage economic growth and efficiency.” 

She also noted that the bill’s provisions updating the schedule of depreciable property under Revenue Procedure 87-56 to include a range of technology and other types of property that did not exist in 1987, would provide clarity, eliminate controversy and provide a more accurate reflection of depreciation.

In addition, Nellen wrote, “The AICPA also applauds your efforts to expand the use of the cash basis method of accounting, by increasing the qualifying threshold from $5 million to $15 million of average gross receipts during the preceding three years, without further restricting its use for the millions of U.S. businesses currently utilizing this method.  The continued use of the cash method for pass-through entities, sole proprietors and personal service corporations is important because it is simpler in application, has fewer compliance costs, and does not require taxpayers to pay tax on income before receiving it.”