SECTION 3. TREATMENT OF YEAR

2000 COSTS

Rev. Proc. 69–21, 1969–2 C.B. 303, provides guidelines to be used in connection with the examination of federal income tax returns involving the costs paid or incurred to develop, purchase, or lease computer software. Year 2000 costs fall within the purview of Rev. Proc. 69–21. Accordingly, the Internal Revenue Service will not disturb a taxpayer’s treatment of its year 2000 costs if the taxpayer treats these costs in accordance with section 3 of Rev. Proc. 69–21 (in the case of developed software, including converted software), section 4 of Rev. Proc. 69–21 (in the case of purchased software), or section 5 of Rev. Proc. 69–21 (in the case of leased software).