IRS extends recurring item deadlines.

• Author: Josephs, Stuart R.
• Position: Brief Article

The Tax Clinic item, "Adopting the Recurring Item Exception to Economic Performance," TTA, May 1991, at 296, discussed the need for filing a recurring item statement with a 1991 return. However, Ann. 92-30 granted a one-year extension and made other changes to the recurring item exception rules.

Electing the

recurring item

exception

If a taxpayer never incurred a type of liability that was eligible for the recurring item exception before the first year beginning after 1991, the taxpayer may adopt this exception as an accounting method for that type of liability for the first tax year beginning after 1991 that the type of liability is incurred by the taxpayer.

However, if a taxpayer has incurred a type of liability eligible for the exception before its first tax year beginning after 1991, the taxpayer may change to the recurring item exception method of accounting for that type of liability for the first tax year beginning after 1991. The transitional adjustment under Sec. 481(a) is taken into account ratably over three years.

The recurring item exception could have been adopted without obtaining IRS consent by attaching a statement to an income tax return for the tax year that included July 19, 1984. If that return was filed before June 20, 1985 without this statement, the statement could have been attached to the following year's return (Ann. 85-121).

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