SECTION 1. PURPOSE

.01 This revenue procedure implements an administrative decision, made by the Commissioner in the exercise of discretion under section 446 of the Internal Revenue Code. Under this revenue procedure, accrual method manufacturers, wholesalers, and retailers of motor vehicles or other durable consumer goods may, in certain specified and limited circumstances, include a portion of an advance payment related to the sale of a multi-year service warranty contract in gross income generally over the life of the service warranty obligation. A taxpayer may change to or adopt the service warranty income method. The procedures for a taxpayer to change to the service warranty income method are provided in Rev. Proc. 97–37, page 18, which provides simplified and uniform procedures to obtain automatic consent to make this and other changes in methods of accounting. This revenue procedure modifies and supersedes Rev. Proc. 92–98, 1992–2 C.B. 512. .02 The service warranty income method described in this revenue procedure is the same method of accounting that was described in Rev. Proc. 92–98. Accordingly, a taxpayer that properly changed to or adopted this method pursuant to Rev. Proc. 92–98 is not required to change its method of accounting to comply with this revenue procedure.