What is Small business gross receipts test?
In short
Businesses with average annual gross receipts of $31,000,000 or less over the prior three years (for 2025) can use the cash method, even as C corporations, and are exempt from several complex rules.
Key takeaways
- They are exempt from the uniform capitalization rules and the business interest limitation.
- They can account for inventory more simply and use the completed contract method for small construction contracts.
- Related businesses are combined for the test.
Where it's tested
REG: C Corporation Taxation — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An individual who is the original purchaser of qualifying small business stock sells it at a loss. Under §1244, how is the loss treated?