Form 3115 — Application for Change in Accounting Method

Official source: IRS Forms, Instructions & Publications (https://www.irs.gov/pub/irs-pdf/f3115.pdf), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

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Form

(Rev. December 2022)

Department of the Treasury Internal Revenue Service

Go to www.irs.gov/Form3115 for instructions and the latest information.

OMB No. 1545-2070

Attachment Sequence No. 315

Name of filer (name of parent corporation if a consolidated group) (see instructions)

Number, street, and room or suite no. If a P.O. box, see the instructions.

City or town, state, and ZIP code

Identification number (see instructions)

Principal business activity code number (see instructions)

Tax year of change begins (MM/DD/YYYY)

Tax year of change ends (MM/DD/YYYY) Name of contact person (see instructions)

Name of applicant(s) (if different than filer) and identification number(s) (see instructions) Contact person’s telephone number

Does the filer want to receive a copy of the change in method of accounting letter ruling or other correspondence related to this Form 3115 by fax or encrypted email attachment? If “Yes,” see instructions . . . . . . . . Yes No If the applicant is a member of a consolidated group, check this box . . . . . . . . . . . . . . . . . . . . If Form 2848 , Power of Attorney and Declaration of Representative, is attached (see instructions for when Form 2848 is required), check this box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Check the box to indicate the type of applicant. Check the appropriate box to indicate the type

Individual Corporation Controlled foreign corporation (Sec. 957) 10/50 corporation (Sec. 904(d)(2)(E)) Qualified personal service corporation (Sec. 448(d)(2)) Exempt organization. Enter Code section:

Cooperative (Sec. 1381) Partnership S corporation Insurance co. (Sec. 816(a)) Insurance co. (Sec. 831)

Other (specify):

Check the appropriate box to indicate the type of accounting method change being requested. See instructions.

Depreciation or Amortization Financial Products and/or Financial Activities of Financial Institutions

Other (specify):

Caution: To be eligible for approval of the requested change in method of accounting, the taxpayer must provide all information that is relevant to the taxpayer or to the taxpayer’s requested change in method of accounting. This includes ( 1 ) all relevant information requested on this Form 3115 (including its instructions), and ( 2 ) any other relevant information, even if not specifically requested on Form 3115.

The taxpayer must attach all applicable statements requested throughout this form.

Form 3115 (Rev. 12-2022) Page 3

Form 3115 (Rev. 12-2022) Page 4

Schedule A—Change in Overall Method of Accounting (If Schedule A applies, Part I below must be completed.)

Part I Change in Overall Method (see instructions) 1 Check the appropriate boxes below to indicate the applicant’s present and proposed methods of accounting. Present method: Cash Accrual Hybrid (attach description) Proposed method: Cash Accrual Hybrid (attach description) 2 Enter the following amounts as of the close of the tax year preceding the year of change. If none, state “None.” Also, attach a statement providing a breakdown of the amounts entered on lines 2a through 2g.

Amount

a Income accrued but not received (such as accounts receivable) . . . . . . . . . . . . . . $

b Income received or reported before it was earned (such as advanced payments). Attach a description of

the income and the legal basis for the proposed method . . . . . . . . . . . . . . . . c Expenses accrued but not paid (such as accounts payable) . . . . . . . . . . . . . . . d Prepaid expenses previously deducted . . . . . . . . . . . . . . . . . . . . . . e Supplies on hand previously deducted and/or not previously reported . . . . . . . . . . . . f Inventory on hand previously deducted and/or not previously reported. Complete Schedule D, Part II . g Other amounts (specify). Attach a description of the item and the legal basis for its inclusion in the

calculation of the section 481(a) adjustment.

h Net section 481(a) adjustment (Combine lines 2a–2g.) Indicate whether the adjustment is an increase (+) or decrease (-) in income. Also enter the net amount of this section 481(a) adjustment amount on Part IV, line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

3 Is the applicant also requesting the recurring item exception under section 461(h)(3)? . . . . . . . Yes No

4 Attach copies of the profit and loss statement (Schedule F (Form 1040) for farmers) and the balance sheet, if applicable, as of the close of the tax year preceding the year of change. Also attach a statement specifying the accounting method used when preparing the balance sheet. If books of account are not kept, attach a copy of the business schedules submitted with the federal income tax return or other return (such as tax-exempt organization returns) for that period. If the amounts in Part I, lines 2a through 2g, do not agree with the amounts shown on the balance sheet, attach a statement explaining the differences.

5 Is the applicant making a change to the overall cash method or to a method in which a taxpayer uses an accrual method for purchases and sales of inventory and uses the cash method for computing all other items of income and expense (see instructions)? . . . . . . . . . . . . . . . . . . . Yes No Part II Change to the Cash Method for Non-Automatic Change Request (see instructions) Applicants requesting a change to the cash method must attach the following information:

1 A description of inventory items (items whose production, purchase, or sale is an income-producing factor) and materials and supplies used in carrying out the business. 2 An explanation as to whether the applicant is required to use an accrual method under any section of the Code or regulations.

Form 3115 (Rev. 12-2022)

Form 3115 (Rev. 12-2022) Page 5 Schedule B—Changes Related to the Deferral Method for Advance Payments, Cost Offset Methods, and/or the Applicable Financial Statement Income Inclusion Rule (see instructions)

1 If the applicant is requesting to change to the deferral method for advance payments under Regulations section 1.451-8(c) or (d), as described in the instructions, attach the information specified in the instructions. 2 If the applicant is requesting to change to or within a cost offset method under Regulations section 1.451-3(c) and/or Regulations section 1.451-8(e), as described in the instructions, attach the information specified in the instructions. 3 If the applicant is requesting to change to or within a method to conform to the applicable financial statement (AFS) income inclusion rule under section 451(b) and Regulations section 1.451-3, as described in the instructions, attach a detailed description of the proposed method including the information specified in the instructions.

Schedule C—Changes Within the LIFO Inventory Method (see instructions)

Part I General LIFO Information Complete this section if the requested change involves changes within the LIFO inventory method. Also, attach a copy of all Forms 970, Application To Use LIFO Inventory Method, filed to adopt or expand the use of the LIFO method.

1 Attach a description of the applicant’s present and proposed LIFO methods and submethods for each of the following items: a Valuing inventory (for example, unit method or dollar-value method). b Pooling (for example, by line or type or class of goods, natural business unit, multiple pools, raw material content, simplified

dollar-value method, inventory price index computation (IPIC) pools, vehicle-pool method, etc.). c Pricing dollar-value pools (for example, double-extension, index, link-chain, link-chain index, IPIC method, etc.). d Determining the current-year cost of goods in the ending inventory (such as, most recent acquisitions, earliest acquisitions during

the current year, average cost of current-year acquisitions, rolling-average cost, or other permitted method). 2 If any present method or submethod used by the applicant is not the same as indicated on Form(s) 970 filed to adopt or expand the use of the method, attach an explanation. 3 If the proposed change is not requested for all the LIFO inventory, attach a statement specifying the inventory to which the change is and is not applicable. 4 If the proposed change is not requested for all of the LIFO pools, attach a statement specifying the LIFO pool(s) to which the change is applicable. 5 Attach a statement addressing whether the applicant values any of its LIFO inventory on a method other than cost. For example, if the applicant values some of its LIFO inventory at retail and the remainder at cost, identify which inventory items are valued under each method. 6 If changing to the IPIC method, attach a completed Form 970. Part II Change in Pooling Inventories 1 If the applicant is proposing to change its pooling method or the number of pools, attach a description of the contents of, and state the base year for, each dollar-value pool the applicant presently uses and proposes to use. 2 If the applicant is proposing to use natural business unit (NBU) pools or requesting to change the number of NBU pools, attach the following information (to the extent not already provided) in sufficient detail to show that each proposed NBU was determined under Regulations sections 1.472-8(b)(1) and (2): a A description of the types of products produced by the applicant. If possible, attach a brochure. b A description of the types of processes and raw materials used to produce the products in each proposed pool. c If all of the products to be included in the proposed NBU pool(s) are not produced at one facility, state the reasons for the

separate facilities, the location of each facility, and a description of the products each facility produces. d A description of the natural business divisions adopted by the taxpayer. State whether separate cost centers are maintained

and if separate profit and loss statements are prepared. e A statement addressing whether the applicant has inventories of items purchased and held for resale that are not further

processed by the applicant, including whether such items, if any, will be included in any proposed NBU pool. f A statement addressing whether all items including raw materials, goods-in-process, and finished goods entering into the entire inventory investment for each proposed NBU pool are presently valued under the LIFO method. Describe any items that are not presently valued under the LIFO method that are to be included in each proposed pool.

g A statement addressing whether, within the proposed NBU pool(s), there are items both sold to unrelated parties and

transferred to a different unit of the applicant to be used as a component part of another product prior to final processing. 3 If the applicant is engaged in manufacturing and is proposing to use the multiple pooling method or raw material content pools, attach information to show that each proposed pool will consist of a group of items that are substantially similar. See Regulations section 1.472-8(b)(3).

4 If the applicant is engaged in the wholesaling or retailing of goods and is requesting to change the number of pools used, attach information to show that each of the proposed pools is based on customary business classifications of the applicant’s trade or business. See Regulations section 1.472-8(c).

Form 3115 (Rev. 12-2022)

Form 3115 (Rev. 12-2022) Page 6 Schedule D—Change in the Treatment of Long-Term Contracts Under Section 460, Inventories, or Other Section 263A Assets (see instructions)

Part I Change in Reporting Income From Long-Term Contracts (Also complete Part III on pages 7 and 8.) 1 To the extent not already provided, attach a description of the applicant’s present and proposed methods for reporting income and expenses from long-term contracts. Also, attach a representative actual contract (without any deletions) for the requested change. If the applicant is a construction contractor, attach a detailed description of its construction activities. 2a Are the applicant’s contracts long-term contracts as defined in section 460(f)(1) (see instructions)? . . Yes No b If “Yes,” do all the contracts qualify for the exception under section 460(e) (see instructions)? . . . . Yes No If line 2b is “No,” attach an explanation. c Is the applicant requesting to use the percentage-of-completion method using cost-to-cost under

Regulations section 1.460-4(b)? . . . . . . . . . . . . . . . . . . . . . . . . Yes No d If line 2c is “Yes,” in computing the completion factor of a contract, will the applicant use the simplified cost-to-cost method described in Regulations section 1.460-5(c)? . . . . . . . . . . . . . Yes No e If line 2c is “No,” is the applicant requesting to use the exempt-contract percentage-of-completion method under Regulations section 1.460-4(c)(2)? . . . . . . . . . . . . . . . . . . . Yes No If line 2e is “Yes,” attach an explanation of what method the applicant will use to determine a contract’s completion factor. If line 2e is “No,” attach an explanation of what method the applicant is using and the authority for its use. 3a Does the applicant have long-term manufacturing contracts as defined in section 460(f)(2)? . . . . . Yes No b If “Yes,” attach a description of the applicant’s manufacturing activities, including any required installation

of manufactured goods. 4 a Does the applicant enter into cost-plus long-term contracts? . . . . . . . . . . . . . . . Yes No b Does the applicant enter into federal long-term contracts? . . . . . . . . . . . . . . . Yes No Part II Change in Valuing Inventories Including Cost Allocation Changes (Also complete Part III on pages 7 and 8.) 1 Attach a description of the inventory goods being changed. 2 Attach a description of the inventory goods (if any) NOT being changed. 3 a Is the applicant subject to section 263A? If “No,” go to line 4a . . . . . . . . . . . . . . Yes No b Is the applicant’s present inventory valuation method in compliance with section 263A (see instructions)?

Specific identification . . . . . . . . . . . . . . . . FIFO . . . . . . . . . . . . . . . . . . . . . LIFO . . . . . . . . . . . . . . . . . . . . . Other (attach explanation) . . . . . . . . . . . . . . Valuation methods:

Cost . . . . . . . . . . . . . . . . . . . . . Cost or market, whichever is lower . . . . . . . . . . . Retail cost . . . . . . . . . . . . . . . . . . . Retail, lower of cost or market . . . . . . . . . . . . . Other (attach explanation) . . . . . . . . . . . . . .

5 If the applicant is changing from the LIFO inventory method to a non-LIFO method, attach the following information (see instructions). a Copies of Form(s) 970 filed to adopt or expand the use of the method. b Only for applicants requesting a non-automatic change. A statement describing whether the applicant is changing to the method required by Regulations section 1.472-6(a) or (b), or whether the applicant is proposing a different method. c Only for applicants requesting an automatic change. The statement required by section 23.01(5) of Rev. Proc. 2022-14 (or its successor).

6 Is the applicant presently using the AFS cost offset method as described in Regulations section 1.451-3(c) and/or the advance payment cost offset method described in Regulations section 1.451-8(e), or is the applicant changing to such methods for the same year of change as the requested change in inventory method? If “Yes,” see the instructions for rules regarding concurrent changes . . . . . . Yes No

Form 3115 (Rev. 12-2022)

Form 3115 (Rev. 12-2022) Page 7 Part III Method of Cost Allocation (Complete this part if the requested change involves either property subject to section 263A or long-term contracts as described in section 460.) See instructions. Section A—Allocation and Capitalization Methods Attach a description (including sample computations) of the present and proposed method(s) the applicant uses to capitalize direct and indirect costs properly allocable to real or tangible personal property produced and property acquired for resale, or to allocate direct and indirect costs required to be allocated to long-term contracts. Include a description of the method(s) used for allocating indirect costs to intermediate cost objectives such as departments or activities prior to the allocation of such costs to long-term contracts, real or tangible personal property produced, and property acquired for resale. The description must include the following:

1 The method of allocating direct and indirect costs (for example, specific identification, burden rate, standard cost, or other reasonable allocation method). 2 The method of allocating mixed service costs (for example, direct reallocation, step-allocation, simplified service cost using the labor-based allocation ratio, simplified service cost using the production cost allocation ratio, or other reasonable allocation method).

3 Except for long-term contract accounting methods, the method of capitalizing additional section 263A costs (for example, simplified production with or without the historic absorption ratio election, modified simplified production with or without the historic absorption ratio election, simplified resale with or without the historic absorption ratio election including permissible variations, the U.S. ratio, or other reasonable allocation method).

Section B—Direct and Indirect Costs Required To Be Allocated

Check the appropriate boxes showing the costs that are or will be fully included, to the extent required, in the cost of real or tangible personal property produced or property acquired for resale under section 263A or allocated to long-term contracts under section 460. Mark “N/A” in a box if those costs are not incurred by the applicant. If a box is not checked, it is assumed that those costs are not fully included to the extent required. Attach an explanation for boxes that are not checked.

Form 3115 (Rev. 12-2022) Page 8 Part III Method of Cost Allocation ( continued ) See instructions. Section C—Other Costs Not Required To Be Allocated (Complete Section C only if the applicant is requesting to change its method for these costs.)

Schedule E—Change in Depreciation or Amortization (see instructions)

Applicants requesting approval to change their method of accounting for depreciation or amortization complete this section. Applicants must provide this information for each item or class of property for which a change is requested.

Note: See the Summary of the List of Automatic Accounting Method Changes in the instructions for information regarding automatic changes under sections 56, 167, 168, or 197, or former sections 168, 1400I, or 1400L. Do not file Form 3115 with respect to certain late elections and election revocations. See instructions.

1 Is depreciation for the property determined under Regulations section 1.167(a)-11 (CLADR)? . . . . Yes No If “Yes,” the only changes permitted are under Regulations section 1.167(a)-11(c)(1)(iii). 2 Is any of the depreciation or amortization required to be capitalized under any Code section, such as section 263A? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No If “Yes,” enter the applicable section 3 Has a depreciation, amortization, expense, or disposition election been made for the property, such as the election under sections 168(f)(1), 168(i)(4), 179, 179C, or Regulations section 1.168(i)-8(d)? . . . . Yes No If “Yes,” state the election made 4 a Attach a statement describing the property subject to the change. Include the property’s description, type, placed-in-service year, and use in the applicant’s trade or business or income-producing activity. Also include the type and amount of any federal tax credit claimed or grant received, along with any necessary adjustments to basis required under the Internal Revenue Code, with respect to the property.

b If the property is residential rental property, did the applicant live in the property before renting it? . . Yes No c Is the property public utility property? . . . . . . . . . . . . . . . . . . . . . . Yes No

5 To the extent not already provided in the applicant’s description of its present method, attach a statement explaining how the property is treated under the applicant’s present method (for example, depreciable property, inventory property, supplies under Regulations section 1.162-3, nondepreciable section 263(a) property, property deductible as a current expense, etc.). 6 If the property is not currently treated as depreciable or amortizable property, attach a statement of the facts supporting the proposed change to depreciate or amortize the property. 7 If the property is currently treated and/or will be treated as depreciable or amortizable property, provide the following information for both the present (if applicable) and proposed methods: a The Code section under which the property is or will be depreciated or amortized (for example, section 168(g)).

b The applicable asset class from Rev. Proc. 87-56, 1987-2 C.B. 674, for each asset depreciated under section 168 (MACRS) or

under former section 1400L; the applicable asset class from Rev. Proc. 83-35, 1983-1 C.B. 745, for each asset depreciated under former section 168 (ACRS); an explanation why no asset class is identified for each asset for which an asset class has not been identified by the applicant. c The facts to support the asset class for the proposed method. d The depreciation or amortization method of the property, including the applicable Code section (for example, 200% declining

balance method under section 168(b)(1)). e The useful life, recovery period, or amortization period of the property. f The applicable convention of the property. g Whether the additional first-year special depreciation allowance (for example, as provided by section 168(k), 168(l), 168(m), or former section 168(n), 1400L(b), or 1400N(d)) was or will be claimed for the property. If not, also provide an explanation as to why no special depreciation allowance was or will be claimed. h Whether the property was or will be in a single asset account, a multiple asset account, or a general asset account.

Form 3115 (Rev. 12-2022)