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The abbreviation “OCBOA” stands for “other comprehensive basis of accounting.” Simply stated, it means any basis of accounting — the method in which a business keeps its books — other than GAAP (generally accepted accounting principles).

Examples of OCBOA include cash-basis accounting and tax-basis accounting.

In my experience with business clients in the real world, none use GAAP. All use OCBOA. (This is my experience with my clients.) The only clients I have who use GAAP accounting are a couple of not-for-profits who need audited financial statements (I help keep the books but a different firm does the audit). Otherwise all of my business clients use the tax basis of accounting.

(If I wanted to be snide, I would say most businesses use “unkempt disaster area that’s dumped in my lap to try and pick through so I can toss a tax return together for them” as their method of accounting, but I digress.)

As a reminder, tax basis does not necessarily = cash basis. A business can use accrual-basis accounting and be on the tax-basis of accounting at the same time.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”