Is "Reverse" Planning Better for Your Situation?
"Reverse" Tax Accounting Method Changes
Depending on their facts and circumstances, some businesses may instead want to accelerate taxable income into 2022 if, for example, they believe tax rates will increase in the near future, or they want to optimize the use of NOLs.
These businesses may want to consider “reverse” planning strategies, such as:
Implementing a variety of “reverse” tax accounting method changes, such as changing to recognize advance payments in the year of receipt or changing to deduct certain tax liabilities (state income, state franchise, real and personal property taxes, payroll taxes) when paid.
Selling and leasing back appreciated property before the end of 2022, creating gain that is taxed currently offset by future deductions of lease expense, being careful that the transaction is not recharacterized as a financing transaction.
Accelerating taxable capital gain into 2022.
Electing out of the installment sale method for installment sales closing in 2022.
Delaying payments of liabilities whose deduction is based on when the amount is paid so that the payment is deductible in 2023 (e.g., paying year-end bonuses after the 2.5-month rule).