California ~ Corporate, Personal Income Taxes: FTB to Follow Federal Procedures for Certain Accounting Method Changes

CCH Tax Day Report

The California Franchise Tax Board (FTB) announced that it is withdrawing FTB Notice 96-3, which declared that the FTB would not follow the federal procedures for a change of accounting method involving previously unclaimed but allowable depreciation or amortization deductions provided by IRS Revenue Procedure 96-31 (1996-1 C.B. 714). The procedures provided by Revenue Procedure 96-31 have been periodically updated by the IRS in subsequent iterations. The latest iteration is embodied in Revenue Procedure 2016-29. Accordingly, the FTB is following the provisions of Revenue Procedure 2016-29. Furthermore, since the FTB does not provide automatic consent, an accounting method change under Revenue Procedure 2016-29 or any of its other iterations may only be made (1) if the taxpayer has a deemed California election, or (2) with the prior consent of the FTB.

FTB Notice 2017-03, California Franchise Tax Board, April 27, 2017, ¶406-674

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