IRS Provides List of Accounting Method Changes to Which Automatic Change Procedures Apply

CCH Tax Day Report

The IRS has released guidance listing the specific changes in accounting method to which the automatic change procedures set forth in Rev. Proc. 2015-13, I.R.B. 2015-5, 419, apply. The latest guidance updates and supersedes the current list of automatic changes found in Rev. Proc. 2016-29, I.R.B. 2016-21, 880.

Significant changes to the list of automatic changes in Rev. Proc. 2016-29 include:

(1) Removing expired waivers to the eligibility rules (formerly referred to as “scope limitations”) for various types of automatic method changes;

(2) Removing automatic accounting method changes (or portions thereof) that are now obsolete;

(3) Section 10.01, relating to start-up expenditures under Code Sec. 195, is modified to allow an automatic change to an amortization period of 180 months;

(4) New Section 10.02 is added to allow a corporation to change under Code Sec. 248 (a) the characterization of an item as an organizational expenditure; (b) the determination of the taxable year in which the corporation begins business to which the organizational expenditures relate; or (c) the amortization period of an organizational expenditure to 180 months;

(5) New Section 10.03 allows a partnership to make the similar changes under Code Sec. 709 ;

(6) Section 11.08 is modified to provide that a taxpayer may not make a change to comply with the tangible property (repair regulations) using the automatic procedure if the taxpayer is changing from capitalizing to deducting repair and maintenance costs and the taxpayer also received a section 1603 grant for energy property in lieu of tax credits in connection with the costs.

(7) Section 12.14, relating to capitalization of interest under the Code Sec. 263A uniform capitalization rules is modified include changes from an improper method of capitalizing interest to a property method;

(8) Section 20.02(1)(b)(ii), relating to a change by a party to a Code Sec. 467 rental agreement from an improper method of inclusion of rent income or expense, is clarified to provide that the automatic change does not apply to a rental agreement that provides a specific allocation of fixed rent that allocates rent to periods other than when the rents are payable;

(9) Section 21.05, relating to impermissible methods of identification and valuation of inventory, is modified to clarify various situations in which the taxpayer may or may not use the automatic change procedure;

(10) Section 21.11, relating to changes from one permissible method of identification and valuation of inventory to another permissible method, is clarified to provide that this automatic change does not apply to allocate costs to inventory under Code Sec. 471 or Code Sec. 263A ;

(11) Section 23.01, relating to certain taxpayers that elected to use the mark-to-market method of accounting under Code Sec. 475 for securities or commodities, is modified to waive certain eligibility rules;

(12) Section 23.02, relating to changes made from the mark-to-market method to a realization method, is modified to clarify that this automatic change is not limited to a change required by Code Sec. 475 ;

(13) Section 25.03, relating to change in qualification as a life/nonlife insurance company, is modified to clarify that the automatic change applies to an insurance company that changed from being treated as a life insurance company under part I of subchapter L to being treated as a nonlife insurance company under Part II of subchapter L, or vice versa;

(14) Section 30,01, relating to the revocation of a Code Sec. 1278(b) election, is modified to include an additional situation in which a taxpayer is treated as having made a deemed election;

(15) New Section 21.18 allows a taxpayer currently deducting inventories to change to a permissible method of identifying and valuing inventories. For example, a taxpayer currently deducting inventories may change to using the first-in, first-out (FIFO) method as its inventory-identification method and cost or market, whichever is lower (LCM), as its inventory-valuation method.

Subject to a transition rule, this revenue procedure is effective for a Form 3115 filed on or after April 19, 2017, for a year of change ending on or after August 31, 2016, that is filed under the automatic change procedures.

Rev. Proc. 2017-30 amplifies and modifies Rev. Proc. 2016-29, I.R.B. 2016-21, 880, as modified by Notice 2016-36, I.R.B. 2016-25, 1029, Rev. Proc. 2016-39, I.R.B. 2016-30, 164, and Notice 2017-6, I.R.B. 2017-3, 422. Rev. Proc. 2016-29, as amplified and modified is superseded in part. Rev. Proc. 2017-30 also modifies Rev. Proc. 2011-46, I.R.B. 2011-42, 518; Rev. Rul. 2004-62, 2004-1 CB 1072; Rev. Rul. 2000-7, 2000-9 CB 712; Rev. Rul. 2000-4, 2000-1 CB 331; and Rev. Proc. 2007-48, 2007-2 CB 110.

Rev. Proc. 2017-30, 2017FED ¶46,272

Other References:

Code Sec. 61

CCH Reference – 2017FED ¶5504.103

Code Sec. 77

CCH Reference – 2017FED ¶6304.20

Code Sec. 162

CCH Reference – 2017FED ¶8520.3175

CCH Reference – 2017FED ¶8610.143

CCH Reference – 2017FED ¶8630.45

CCH Reference – 2017FED ¶8630.1226

CCH Reference – 2017FED ¶8630.1242

CCH Reference – 2017FED ¶8754.1695

Code Sec. 163

CCH Reference – 2017FED ¶9104.62

CCH Reference – 2017FED ¶9303.10

CCH Reference – 2017FED ¶9303.45

Code Sec. 166

CCH Reference – 2017FED ¶10,690.155

Code Sec. 167

CCH Reference – 2017FED ¶11,009.135

CCH Reference – 2017FED ¶11,043.283

CCH Reference – 2017FED ¶11,043.284

CCH Reference – 2017FED ¶11,043.285

CCH Reference – 2017FED ¶11,043.288

CCH Reference – 2017FED ¶11,043.45

Code Sec. 168

CCH Reference – 2017FED ¶11,279.18

CCH Reference – 2017FED ¶11,279.337

CCH Reference – 2017FED ¶11,279.68

CCH Reference – 2017FED ¶11,279.70

Code Sec. 171

CCH Reference – 2017FED ¶11,855.65

Code Sec. 174

CCH Reference – 2017FED ¶12,047.115

Code Sec. 179D

CCH Reference – 2017FED ¶12,138D.20

Code Sec. 195

CCH Reference – 2017FED ¶12, 371.45

Code Sec. 197

CCH Reference – 2017FED ¶12,455.30

Code Sec. 263

CCH Reference – 2017FED ¶13,709.105

CCH Reference – 2017FED ¶13,709.144

CCH Reference – 2017FED ¶13,709.169

CCH Reference – 2017FED ¶13,709.257

CCH Reference – 2017FED ¶13,709.385

CCH Reference – 2017FED ¶13,709.469

CCH Reference – 2017FED ¶13,709.530

CCH Reference – 2017FED ¶13,709.564

CCH Reference – 2017FED ¶13,709.578

Code Sec. 263A

CCH Reference – 2017FED ¶13,815.23

CCH Reference – 2017FED ¶13,815.24

CCH Reference – 2017FED ¶13,822.80

CCH Reference – 2017FED ¶13,822.85

CCH Reference – 2017FED ¶13,822.30

CCH Reference – 2017FED ¶13,829.20

CCH Reference – 2017FED ¶13,829.70

CCH Reference – 2017FED ¶13,833.15

CCH Reference – 2017FED ¶13,833.52

CCH Reference – 2017FED ¶13,848.15

CCH Reference – 2017FED ¶13,848.57

CCH Reference – 2017FED ¶13,850.28

CCH Reference – 2017FED ¶13,850.50

Code Sec. 267

CCH Reference – 2017FED ¶14,161.11

Code Sec. 280F

CCH Reference – 2017FED ¶15,108.33

Code Sec. 381

CCH Reference – 2017FED ¶17,031.17

Code Sec. 404

CCH Reference – 2017FED ¶18,352.18

Code Sec. 446

CCH Reference – 2017FED ¶20,620.102

CCH Reference – 2017FED ¶20,620.111

CCH Reference – 2017FED ¶20,620.143

CCH Reference – 2017FED ¶20,620.144

CCH Reference – 2017FED ¶20,620.166

CCH Reference – 2017FED ¶20,620.20

CCH Reference – 2017FED ¶20,620.217

CCH Reference – 2017FED ¶20,620.222

CCH Reference – 2017FED ¶20,620.226

CCH Reference – 2017FED ¶20,620.238

CCH Reference – 2017FED ¶20,620.239

CCH Reference – 2017FED ¶20,620.2412

CCH Reference – 2017FED ¶20,620.242

CCH Reference – 2017FED ¶20,620.243

CCH Reference – 2017FED ¶20,620.2432

CCH Reference – 2017FED ¶20,620.247

CCH Reference – 2017FED ¶20,620.248

CCH Reference – 2017FED ¶20,620.249

CCH Reference – 2017FED ¶20,620.2505

CCH Reference – 2017FED ¶20,620.2507

CCH Reference – 2017FED ¶20,620.251

CCH Reference – 2017FED ¶20,620.258

CCH Reference – 2017FED ¶20,620.284

CCH Reference – 2017FED ¶20,620.285

CCH Reference – 2017FED ¶20,620.286

CCH Reference – 2017FED ¶20,620.292

CCH Reference – 2017FED ¶20,620.304

CCH Reference – 2017FED ¶20,620.323

CCH Reference – 2017FED ¶20,620.3235

CCH Reference – 2017FED ¶20,620.625

CCH Reference – 2017FED ¶20,620.627

CCH Reference – 2017FED ¶20,620.6275

CCH Reference – 2017FED ¶20,620.6305

CCH Reference – 2017FED ¶20,620.641

CCH Reference – 2017FED ¶20,620.95

CCH Reference – 2017FED ¶20,803.50

Code Sec. 448

CCH Reference – 2017FED ¶20,803.75

Code Sec. 451

CCH Reference – 2017FED ¶21,005.7043

CCH Reference – 2017FED ¶21,005.9327

CCH Reference – 2017FED ¶21,005.933

CCH Reference – 2017FED ¶21,005.946

Code Sec. 454

CCH Reference – 2017FED ¶21,503.35

Code Sec. 460

CCH Reference – 2017FED ¶21,560.40

CCH Reference – 2017FED ¶21,560.50

Code Sec. 461

CCH Reference – 2017FED ¶21,817.128

CCH Reference – 2017FED ¶21,817.163

CCH Reference – 2017FED ¶21,817.2099

CCH Reference – 2017FED ¶21,817.235

CCH Reference – 2017FED ¶21,817.2377

CCH Reference – 2017FED ¶21,817.287

CCH Reference – 2017FED ¶21,817.3215

Code Sec. 471

CCH Reference – 2017FED ¶22,206.5075

CCH Reference – 2017FED ¶22,208.50

CCH Reference – 2017FED ¶22,208.76

CCH Reference – 2017FED ¶22,210.24

CCH Reference – 2017FED ¶22,218.10

CCH Reference – 2017FED ¶22,218.35

Code Sec. 472

CCH Reference – 2017FED ¶22,240.55

CCH Reference – 2017FED ¶22,240.70

CCH Reference – 2017FED ¶22,241.45

Code Sec. 475

CCH Reference – 2017FED ¶22,268.20

Code Sec. 481

CCH Reference – 2017FED ¶22,277.38

CCH Reference – 2017FED ¶22,277.40

CCH Reference – 2017FED ¶22,277.498

CCH Reference – 2017FED ¶22,277.502

CCH Reference – 2017FED ¶22,277.51

CCH Reference – 2017FED ¶22,277.70

Code Sec. 832

CCH Reference – 2017FED ¶26,157.395

Code Sec. 833

CCH Reference – 2017FED ¶26,171.10

Code Sec. 846

CCH Reference – 2017FED ¶26,331.105

Code Sec. 860D

CCH Reference – 2017FED ¶26,662.65

Code Sec. 1273

CCH Reference – 2017FED ¶31,283.50

CCH Reference – 2017FED ¶31,283.60

Code Sec. 1276

CCH Reference – 2017FED ¶31,361.40

Code Sec. 1278

CCH Reference – 2017FED ¶31,401.40

Code Sec. 1281

CCH Reference – 2017FED ¶31,421.35

Code Sec. 1361

CCH Reference – 2017FED ¶32,026.11

Code Sec. 1363

CCH Reference – 2017FED ¶32,062.20

Statement of Procedural Rules Sec. 601.204

CCH Reference – 2017FED ¶43,384.10

CCH Reference – 2017FED ¶43,384.45

Tax Research Consultant

CCH Reference – TRC ACCTNG: 21,302.10

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