Tax Tips for Donated Vehicles

"Hi, Tom Choisnet, enrolled agent again. I spoke recently about "cash basis accounting", the opposite of "cash basis accounting" is "accrual accounting", whereas income is reported as it is earned rather than received, and this is required of people who are in retail and have inventories as a basis for their accounting. We see that, the best example is furniture stores, and when they send the furniture out the door it's sold, and that's the kind of organization that should use the accrual accounting. It gets rather complex, and over the years the Internal Revenue has liberalized it a little bit - there's still some questions as to where it's applicable, but it's certainly food for thought because businesses up to one million dollars in size may use cash basis accounting. My recommendation in that is cash basis accounting where otherwise accrual required businesses might be okay, but do take into consideration inventories so that you are comfortable that you've reported a fair amount of the income that you've earned. It gets a little crazy, and that's why most taxpayers are cash based accounting. I hope I've helped you a little bit on this. I'm Tom Choisnet. Thank you for watching."