I 
113TH CONGRESS 
1ST SESSION 
H. R. 947 
To amend the Internal Revenue Code of 1986 to expand the availability 
of the cash method of accounting for small businesses, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 5, 2013 
Mr. SCHOCK (for himself and Mr. THOMPSON of California) introduced the 
following bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to expand 
the availability of the cash method of accounting for 
small businesses, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Ac-
counting and Tax Simplification Act’’. 
SEC. 2. CLARIFICATION OF CASH ACCOUNTING RULES FOR 
SMALL BUSINESS. 
(a) CASH ACCOUNTING PERMITTED.— 
(1) IN GENERAL.—Section 446 of the Internal 
Revenue Code of 1986 (relating to general rule for 
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methods of accounting) is amended by adding at the 
end the following new subsection: 
‘‘(g) CERTAIN SMALL BUSINESS TAXPAYERS PER-
MITTED TO USE CASH ACCOUNTING METHOD WITHOUT 
LIMITATION.— 
‘‘(1) IN GENERAL.—An eligible taxpayer shall 
not be required to use an accrual method of account-
ing for any taxable year. 
‘‘(2) ELIGIBLE
TAXPAYER.—For purposes of 
this subsection, a taxpayer is an eligible taxpayer 
with respect to any taxable year if— 
‘‘(A) for all prior taxable years beginning 
after December 31, 2012, the taxpayer (or any 
predecessor) met the gross receipts test of sec-
tion 448(c), and 
‘‘(B) the taxpayer is not subject to section 
447 or 448.’’. 
(2) EXPANSION OF GROSS RECEIPTS TEST.— 
(A) IN GENERAL.—Paragraph (3) of sec-
tion 448(b) of such Code (relating to entities 
with 
gross 
receipts 
of 
not 
more 
than 
$5,000,000) 
is 
amended 
by 
striking 
‘‘$5,000,000’’ in the text and in the heading 
and inserting ‘‘$10,000,000’’. 
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(B) CONFORMING AMENDMENTS.—Section 
448(c) of such Code is amended— 
(i) by striking ‘‘$5,000,000’’ each 
place it appears in the text and in the 
heading of paragraph (1) and inserting 
‘‘$10,000,000’’, and 
(ii) by adding at the end the following 
new paragraph: 
‘‘(4) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning in a calendar year after 
2013, the dollar amount contained in subsection 
(b)(3) and paragraph (1) of this subsection shall be 
increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, by sub-
stituting ‘calendar year 2012’ for ‘calendar year 
1992’ in subparagraph (B) thereof. 
If any amount as adjusted under this subparagraph 
is not a multiple of $100,000, such amount shall be 
rounded to the nearest multiple of $100,000.’’. 
(b) CLARIFICATION
OF INVENTORY RULES
FOR 
SMALL BUSINESS.— 
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(1) IN GENERAL.—Section 471 of the Internal 
Revenue Code of 1986 (relating to general rule for 
inventories) is amended by redesignating subsection 
(c) as subsection (d) and by inserting after sub-
section (b) the following new subsection: 
‘‘(c) SMALL BUSINESS TAXPAYERS NOT REQUIRED 
TO USE INVENTORIES.— 
‘‘(1) IN GENERAL.—A qualified taxpayer shall 
not be required to use inventories under this section 
for a taxable year. 
‘‘(2) TREATMENT OF TAXPAYERS NOT USING 
INVENTORIES.—If a qualified taxpayer does not use 
inventories with respect to any property for any tax-
able year beginning after December 31, 2012, such 
property shall be treated as a material or supply 
which is not incidental. 
‘‘(3) QUALIFIED TAXPAYER.—For purposes of 
this subsection, the term ‘qualified taxpayer’ 
means— 
‘‘(A) any eligible taxpayer (as defined in 
section 446(g)(2)), and 
‘‘(B) any taxpayer described in section 
448(b)(3).’’. 
(2) CONFORMING AMENDMENTS.— 
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(A) Subpart D of part II of subchapter E 
of chapter 1 of such Code is amended by strik-
ing section 474. 
(B) The table of sections for subpart D of 
part II of subchapter E of chapter 1 of such 
Code is amended by striking the item relating 
to section 474. 
(c) EFFECTIVE DATE AND SPECIAL RULES.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2012. 
(2) CHANGE IN METHOD OF ACCOUNTING.—In 
the case of any taxpayer changing the taxpayer’s 
method of accounting for any taxable year under the 
amendments made by this section— 
(A) such change shall be treated as initi-
ated by the taxpayer; 
(B) such change shall be treated as made 
with the consent of the Secretary of the Treas-
ury; and 
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer 
under section 481 of the Internal Revenue Code 
of 1986 shall be taken into account over a pe-
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riod (not greater than 4 taxable years) begin-
ning with such taxable year. 
Æ 
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