SECTION 11. EFFECTIVE DATE

This revenue procedure is eff e c t i v e October 27, 1997, the date it is published in the Internal Revenue Bulletin.

DRAFTING INFORMATION

The principal authors of this revenue procedure are Jeffrey L. Vogel and Michael J. Wilder of the Office of Assistant Chief Counsel (Corporate). For further information regarding this revenue procedure, contact Jeffrey L. Vogel or Michael J. Wilder at (202) 622-7770 (not a toll-free call).

§ 1.1502–13(e)(3) has been revoked pursuant to this Section 8.01.

.02 The Service’s consent under § 1.1502–13(e)(3) is granted for any consolidated group to revoke a valid consent received from the Service under § 1.1502–13(e)(3) to treat intercompany transactions on a separate entity basis, and thus treat intercompany transactions on a single entity basis, provided a statement is attached to the consolidated g r o u p ’s original return for the taxable year in which the revocation is to be effective indicating its revocation of the consent pursuant to this Section 8.02. In cases where a valid consent from the Service to report intercompany transactions on a separate entity basis was not previously obtained and the consolidated group wants to change from separate entity reporting to single entity reporting, see Section 9.

.03 Notwithstanding that the Service has granted consent under § 1.1502– 13(e)(3) and that such consent has not been revoked pursuant to Section 8.01 or 8.02, the district director may, upon examination of tax returns for years subsequent to the consent year, recommend that the ruling granting such consent be modified or revoked if the conditions and circumstances under which the ruling was granted have changed substantially and it is determined that single entity reporting is necessary in order to clearly reflect CTI under § 446. If the district director recommends that the ruling granting such consent be modified or revoked, the district director will forward the matter to the national office for consideration before any further action is taken. Such a referral to the national office will be treated as a request for technical advice, and the provisions of Rev. Proc. 97–2, 1997–1 I.R.B. 64, or its successor, will be followed. .04 When consent under § 1.1502–13

(e)(3) is revoked pursuant to Section 8.01, 8.02 or 8.03, each member of the consolidated group must report those intercompany transactions for which consent has been revoked on a single entity basis for the taxable year of the revocation and all subsequent taxable years (ending prior to the first taxable year for which the group does not file a consolidated return) unless consent is received pursuant to a new request submitted under Section 4.

.05 Section 446(e) consent is granted under § 1.1502–13(e)(3)(iii) for any changes in methods of accounting for intercompany transactions that are necessary solely to conform a member’s methods to a revocation of consent made pursuant to this revenue procedure, provided the changes are made in the taxable year for which the revocation is made. Any such changes in methods are effected on a cut-off basis (that is, no § 481(a) adjustment will be made). For any subsequent taxable year, § 446(e) consent must be separately requested under applicable administrative procedures if a member has failed to conform its accounting practices to the treatment of intercompany transactions required as a result of a revocation made pursuant to this revenue procedure. See Rev. Proc. 97–27, or its successor. Any such changes in methods are e ffected on a cut-off basis (that is, no § 481(a) adjustment will be made).