This template tracks the adjustments resulting from a change in accounting method under IRC Sec. 481(a). When a taxpayer changes its accounting method, adjustments must be made to ensure that the change does not result in the omission or duplication of an item of income or expense. These adjustments, referred to as Section 481(a) adjustments, quantify the cumulative effect that the change in method has on taxable income. A “positive” Section 481(a) adjustment increases income, while a “negative” Section 481(a) adjustment decreases income.
See the “Computing 481(a) Adjustments” template for the computation of the amount of the Section 481(a) adjustment. These adjustments are taken into account over varying periods of time on a prospective basis. For this purpose, a short year is treated as a full year. This template tracks up to 10 adjustments.
All of the information needed to produce the calculations is entered on the Input worksheet. The yellow highlighted cells are calculated fields, and no data should be entered in these cells. Gray cells are not calculated fields, but data should not be entered in these cells.