SECTION 5. CHANGE IN METHOD

OF ACCOUNTING

.01 Consent. The retail motor fuels outlet election for any property within the scope of this revenue procedure is a change in method of accounting. Under § 1.446–1(e)(2)(i), the consent of the Commissioner is hereby granted to taxpayers to make this method change for § 1250 property within the scope of this revenue procedure. This consent is granted for the taxpayer’s year of change. The consent is conditioned, however, on the taxpayer’s complying with this section and section 4 of this revenue procedure. If the taxpayer does not comply with these sections, the taxpayer will be deemed to have initiated a change in method of accounting without obtaining the consent of the Commissioner required under § 446(e).

.02 Year of change. The year of change is the taxpayer’s taxable year that includes August 20, 1996, the date of enactment of the Act.

.03 Section 481(a) adjustment.

er’s property underwent a change in use as described in section 2.01 of this revenue procedure, the § 481(a) adjustment must only take into account those taxable years the property qualified as a retail motor fuels outlet.

(2) Section 481(a) adjustment pe- riod. In computing taxable income, a taxpayer must take into account (a) the entire net negative § 481(a) adjustment in the year of change, or (b) any net positive § 481(a) adjustment ratably over 3 years, beginning with the year of change.

(3) Alternative minimum tax. The amounts of the § 481(a) adjustments for regular tax and alternative minimum tax purposes may differ. The § 481(a) adjustment relating to the alternative minimum taxable income will be included in the computation of the alternative minimum taxable income over the same § 481(a) adjustment period applicable under section 5.03(2) of this revenue procedure. The difference between the two § 481(a) adjustments will require an adjustment to taxable income in order to arrive at alternative minimum taxable income. See Form 6251 (Alternative Minimum Tax—Individuals) and Form 4626 (Alternative Minimum Tax— Corporations).

.04 Manner of making method change.

(1) Complete and file a current Form 3115. The retail motor fuels outlet election is made on the taxpayer’s timely filed (including extensions) original federal income tax return for the year of change or on an amended return for the year of change filed no later than

* . The election is made by attaching a completed, current Form 3115 to the taxpayer’s original or amended return for the year of change. The requirement to file a Form 3115 within 180 days after the beginning of the year of change is waived in accordance with § 1.446–1(e)(3)(ii). In addition, a copy of the Form 3115 must be filed with the national office no later than when the original Form 3115 is filed with the federal income tax return or the amended return. The copy should be sent to the Commissioner of Internal Revenue, Attention: Office of Assistant Chief Counsel (Passthroughs and Special Industries) CC:DOM:P&SI, P.O. Box 7604, Benjamin Franklin Station, Washington, D.C. 20024.

• Insert the date that is 180 days after the publication of this revenue procedure.

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If more than one member of a consolidated group is making the retail motor fuels outlet election, the parent corporation may file a single Form 3115 on behalf of the members of the consolidated group making the election in accordance with Rev. Proc. 92–90, 1992–2 C.B. 501 (or any successor). See section 5.02 of Rev. Proc. 92–90 for the information required to be submitted with the Form 3115.

In completing the current Form 3115 (Rev. February 1996), the taxpayer must complete Schedule D, Part II, Change in Depreciation or Amortization (page 7 of the Form 3115), and any other applicable schedule. With respect to Parts I through III on pages 1 and 2 of the Form 3115 the taxpayer must provide only the information requested on the following lines:

(a) Part I, Eligibility To Request Change (page 1)-lines 1, 2a, 2b, 3a, 4a, 5a, and 6; (b) Part II, Description of Change (page 2)-lines 7, 8, and 10; and

(c) Part III, Section 481(a) Adjustment (page 2)-lines 20, 22, 23, and 25. Include on line 20 the amounts of the § 481(a) adjustments for regular tax and alternative minimum tax purposes. The taxpayer does not have to complete Part IV, Additional Information (page 3).

(2) No user fee. No user fee is required for a Form 3115 filed under this revenue procedure.

.05 Basis adjustment. As of the beginning of the year of change, the basis of the property for which the retail motor fuels outlet election is made must reflect the reductions required by § 1016(a)(2) for the depreciation allowable for the property (as determined under the taxpayer’s proposed method of accounting) for all open and closed years prior to the year of change.

.06 Protection from examination changes.

(1) In general. If a taxpayer timely files a completed Form 3115 to change its method of accounting in the manner

described in this revenue procedure and otherwise complies with the provisions of this revenue procedure, the district director may not propose that the taxpayer change the same method of accounting as that changed by the taxpayer under this revenue procedure for a year prior to the year of change prescribed in this revenue procedure. The district director, however, may verify the facts underlying the method change, including whether the property qualifies as a retail motor fuels outlet, the amounts of the regular tax and alternative minimum tax § 481(a) adjustments, the § 481(a) adjustment period, and the § 1016(a)(2) adjustment to the basis of the property.

(2) Taxpayer under examination, before an appeals office, or before a federal court. If a change in method of accounting under this revenue procedure results in a positive § 481(a) adjustment for an item of property, a taxpayer does not receive the protection from examination changes described in section 5.06(1) of this revenue procedure for that property if, on **, the method of accounting is an issue:

(a) under consideration with respect to an examination of the taxpayer’s federal income tax return for any taxable year. The issue is under consideration if the taxpayer has received written notification from the examining agent(s) ( e.g., by examination plan, information document request, notification of proposed adjustments or income tax examination changes) specifically citing the method of accounting as an issue under consideration for the taxable year(s) under examination;

(b) before an appeals office of the Internal Revenue Service with respect to an examination of the taxpayer’s federal income tax return for any taxable year; or