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Cannabis Accounting Resources

Applying § 1.471-11 to the Cannabis Industry

Applying Treasury Regulation Section 1.471-11 using the accrual tax-basis of accounting (modified).

Applying § 1.471-11 to the Cannabis Industry

Disclaimer: The information contained within this document is highly summarized and should not be construed to be complete or used as a sole source of information, nor should it be relied upon, interpreted, or used as any type of authority, advice, or opinion, in any form.  The information is applicable as of the original publish date.  All citations related to federal income tax codes and regulations within this document are abbreviated for readability purposes only, however are intended to be clear as to the sections and subparagraphs referenced. The content is provided for general purposes only; all information within should be independently verified. The use of this disclaimer does not affect the degree of care given to the summary information written or sources referenced. Please contact your tax advisor to discuss any topics pertaining to your business or situation.  Originally presented December 12, 2023, at the Michigan Association of Certified Public Accountants Cannabis Summit.

Applying Treasury Regulation Section 1.471-11 using the accrual tax-basis of accounting (modified) for financial reporting for cannabis cultivators and processors.

Learning Objectives:

  • Review Internal Revenue Code 471 and Treasury Regulation 1.471-11, and why these apply to the cannabis industry;

  • Discuss best practices for accommodating § 1.471-11 rules within your client’s accounting system, following the accrual tax-basis of accounting (modified);

  • Review a practical example of accounting for inventory following § 1.471-11;

  • Review example financial statement footnotes for preparation engagements under SSARS.

 

This presentation provides an overview of applying Treasury Regulation Section 1.471-11 in the set-up and maintenance of an accounting and financial reporting system and processes for cannabis cultivators and processors. The goal of the presentation is to provide a practical example of this accounting methodology, along with supporting resources. The presentation should only be interpreted by those with an understanding of cannabis accounting issues, including Internal Revenue Code Sections 280E, 471, and other nuances and tax matters impacting this highly specialized industry. Clicking the below image or button will open the presentation and accompanying attachment in PDF format.


 

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