G's accountant recently determined that G should be capitalizing certain costs that he has traditionally expensed.According to the accountant, G is using a clearly erroneous method of accounting.A change to the proper method would result in substantial income in the year of the change.G should consider voluntarily making the change to the proper method because the treatment is more favorable than if the IRS requires the change.

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If G voluntarily changes to the proper method of accounting, he can potentially avoid penalties and interest that would be imposed by the IRS if they were to require the change. Additionally, making the change voluntarily may allow G to spread the income over a few years, reducing the impact on his tax liability for any one year.

G's Accountant Recently Determined That G Should Be Capitalizing Certain