!

CAUTION

For CFCs and 10/50 corporations, the issue under consideration rules are different. See section 3.08(4) of Rev. Proc. 2015-13.

Lines 6c and 6d. If you answered “Yes” to line 6a, include the name and telephone number of the examining agent, and the tax year(s) under examination in the designated places on line 6c. For any present or former consolidated groups, if there is a tax year under examination, complete the information on line 6c. Provide a copy of Form 3115 to the examining agent no later than the date the filer timely files Form 3115. See section 6.03(3) (a) of Rev. Proc. 2015-13.

Line 7a. In general, audit protection applies when an application for change in accounting method is granted. See section 8.01 of Rev. Proc. 2015-13. For exceptions where audit protection is not provided, see section 8.02 of Rev. Proc. 2015-13. You should answer “Yes” even if you do not receive audit protection when the change is granted but might receive it at the end of the exam under section 8.02(1)(f) of Rev. Proc. 2015-13. For example, a change made under DCN 17 for an applicant that wants to change its treatment of research and experimental expenditures does not receive audit protection. See the List of Automatic Changes for additional method changes not subject to audit protection. If you are making a change on behalf of one or more applicants that are CFCs or 10/50 corporations and audit protection is unavailable for any such applicants for one or more years due to the application of section 8.02(5) of Rev. Proc. 2015-13, you should check “No” and attach an explanation stating the applicants and the years for which there is no audit protection under section 8.02(5).

If no audit protection is given for the requested change, check “No” and attach an explanation. For example, if you are making a change under DCN 17, your explanation is DCN 17. If you are making a change under DCN 7, your explanation could be that none of the items on line 7b apply. If multiple items are being changed on one Form 3115 and at least one item has audit protection and another item does not have audit protection, check both “Yes” and “No.”

Line 7b. Generally, the applicant receives audit protection for tax years prior to the year of change if they fall into one of the following categories listed below. If Form 3115 is being filed on behalf of multiple applicants or if multiple items are being changed on one Form 3115, check all that apply and attach a statement identifying which category applies to which applicant or item. Except for “Not under exam” and “Other,” the following only apply to applicants under examination.

• Not under exam. Check this box if (A) the applicant is not under exam, and (B) audit protection applies to the item(s) being changed.

• 3-month window. The 3-month window is the period beginning on the 15th day of the 7th month following the close of the applicant's tax year and ending on the 15th day of the 10th month following the close of the applicant's tax year. For 52-53-week applicants, the tax year begins on the 1st day of the calendar month nearest to the 1st day of the 52-53-week tax year. See Rev. Proc. 2015-33. For applicants with a short tax year ending before the 15th day of the 10th month after the short tax year begins, the 3-month window is the period beginning on the 1st day of the 2nd month preceding the month in which the short tax year ends and ending on the last day of the short tax year. An applicant qualifies under the 3-month window period when (A) it has been under examination for at least 12 consecutive months as of the 1st day of the 3-month window, and (B) the accounting method for the same item the applicant is requesting to change is not an issue under consideration. See section 8.02(1)(a) of Rev. Proc. 2015-13. Checking this box satisfies the statement requirement of section 8.02(1)(a)(iv) of Rev. Proc. 2015-13.

• 120-day window period. The 120-day window is the 120-day period following the date an examination of the applicant ends, regardless of whether a subsequent examination has commenced. An applicant qualifies under the 120-day window period if Form 3115 is filed in a 120-day window and the accounting method for the same item the applicant is requesting to change is not an issue under consideration. See section 8.02(1)(b) of Rev. Proc. 2015-13. If the applicant checks this box, also include the date the examination ended in the designated space on line 7b.

• Method not before the director. The present method is not before the director when it is (A) a change from a clearly permissible method of accounting or (B) a change from an impermissible method of accounting and the impermissible method was adopted subsequent to the tax year(s) under examination on the date the applicant files Form 3115. Checking this box satisfies the statement requirement of section 8.02(1)(c) (ii) of Rev. Proc. 2015-13.

• Change resulting in a negative adjustment. Check this box if the change results in a negative adjustment. A negative adjustment occurs where an item (A) results in a negative section 481(a) adjustment for that item for the year of change, and (B) would have resulted in a negative section 481(a) adjustment in each tax year under examination if the change in accounting method for that item had been made in the tax year(s) under examination. Checking this box satisfies the statement requirement in section 8.02(1)(e)(iii) of Rev. Proc. 2015-13.

• CAP. This box applies only to consolidated group members participating in the compliance assurance process (CAP). In general, audit protection applies to a new member if the new member is under audit solely by joining a consolidated group that participates in the CAP. See section 8.02(1)(d) of Rev. Proc. 2015-13. Checking this box satisfies the statement requirement of section 8.02(1)(d)(ii) of Rev. Proc. 2015-13. If the applicant checks this box, include the date the member joined the consolidated group in the designated space on line 7b.

• Other. The List of Automatic Changes or other guidance published in the I.R.B. may provide applicants with audit protection. For example, specific guidance may provide a filer under exam with audit protection. If this box is checked, attach a statement citing the guidance providing audit protection.

• Audit protection at end of exam. If the applicant does not fall into one of the categories listed above for line 7b, this box should generally be checked. The applicant may receive audit protection at the end of the examination, provided the examining agent does not propose an adjustment for the same item and the accounting method for that same item is not an issue under consideration. For certain foreign corporations, the applicant must satisfy additional requirements in order to receive audit protection at the end of the examination. See section 8.02(1)(f) of Rev. Proc. 2015-13.

For CFCs and 10/50 corporations, the rules for audit