SECTION 6. CHANGE IN METHOD OF

ACCOUNTING

.01 Consent. A change in a taxpayer’s method of accounting to mark-to-market accounting is a change in method of accounting to which the provisions of §§ 446 and 481 and the regulations thereunder apply. The Commissioner hereby grants consent for a taxpayer to change its method of accounting for securities or commodities, as appropriate, if the following conditions are satisfied:

(1) the taxpayer is described in section 3 of this revenue procedure;

(2) the taxpayer complies with the election requirements set forth in section 5 of this revenue procedure;

(3) the method of accounting to which the taxpayer is changing is in accordance with its election under § 475;

(4) the year of change is the election year; and

(5) the taxpayer complies with the applicable requirements of this section 6.

.02 Filing requirements. (1) Taxpayers electing under section 5.01. A taxpayer described in sections 3 and 5.01(1) of this revenue procedure that changed its method of accounting to properly reflect the application of § 475 on its original federal income tax return for the election year has satisfied the filing re

quirements of this section 6.02. A taxpayer described in section 3 that is required to change its method of accounting to comply with its election under section 5.01(2) must comply with the requirements of section 6.02(2) of this revenue procedure (substituting the amended return required by section 5.01(2) for the original return referred to in section 6.02(2)).

(2) Taxpayers electing under section 5.02 or 5.03(1). A taxpayer described in section 3 of this revenue procedure that makes an election under section 5.02 or 5.03(1) of this revenue procedure and is required to change its method of accounting must complete and file a Form 3115 for the year of change pursuant to the filing requirements in section 6.02 of Rev. Proc. 98–60, 1998–51 I.R.B. 16. Thus, the original Form 3115 must be attached to the taxpayer’s timely filed (including extensions) original federal income tax return for the year of change, and 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 for the year of change. The label described in section 6.02(3) of Rev. Proc. 98–60, however, should refer to this revenue procedure rather than to the APPENDIX of Rev. Proc. 98–60. Further, in the additional statement described in section 6.02(5) of Rev. Proc. 98–60, the taxpayer must agree to all the terms and conditions in this revenue procedure rather than those in Rev. Proc. 98–60.

.03 Section 481(a) adjustment. If a taxpayer changes its method of accounting under section 6.01 of this revenue procedure, the taxpayer must take into account the net amount of the § 481(a) adjustment in the manner provided in section 5.04 of Rev. Proc. 98–60. Thus, the § 481(a) adjustment generally is taken into account ratably over four taxable years beginning with the year of change. For purposes of § 481, a change in method of accounting made under this revenue procedure is a change in method of accounting initiated by the taxpayer.