SECTION 10. EFFECT — Internal Revenue Bulletin 2001-37

DOCUMENTS

Rev. Proc. 99–49 is modified and amplified to include this accounting method change in the APPENDIX.

DRAFTING INFORMATION

The principal author of this revenue procedure is Kimberly L. Koch of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Ms. Koch at (202) 622-5020 (not a toll-free call).

APPENDIX

Department of the Treasury Internal Revenue Service

Closing Agreement on Final Determination Covering Specific Matters

Under § 7121 of the Internal Revenue Code of 1986, [Taxpayer’s name, address, telephone number, and identifying number] (“the taxpayer”) and the Commissioner of Internal Revenue make the following closing agreement:

WHEREAS:

The taxpayer files (or is a member of a combined reporting group that files) a Form R-1 based on the same reporting period as the taxpayer’s taxable year.
The taxpayer is an accrual basis taxpayer.
The issue covered in this closing agreement is the taxpayer’s treatment of track structure expenditures incurred as a result of performing various activities to acquire, construct, maintain, repair, and improve track structure. The definition of

“track structure expenditures” and other terms defined in section 4 of Rev. Proc. 2001–46, apply for purposes of this closing agreement.

The taxable years covered by this closing agreement are [insert applicable taxable years].
The taxpayer currently accounts for track structure expenditures as follows:

[insert taxpayer’s current method of accounting for track structure expenditures].

The taxpayer and the Internal Revenue Service (“Service”) rely on the following facts and representations in making this closing agreement: [insert relevant facts, including the track maintenance allowance and the capitalized amount under the track maintenance allowance method for each taxable year under examination, before an area appeals office, or before the Tax Court, (whichever is applicable) an explanation of the computations used to determine those amounts, and a statement of whether the track maintenance allowance for each of those taxable years is taken into account for federal income tax purposes]. NOW IT IS HEREBY DETERMINED AND AGREED for federal income tax purposes:
That the Service is changing the taxpayer’s method of accounting for track structure expenditures to the track maintenance allowance method of accounting described in section 5 of Rev. Proc. 2001–46, for the taxable year ending [insert earliest open taxable year after which there is no closed taxable year].
That the method change will be implemented using a cut-off method.
That the adjustments to taxable income necessary to reflect the new method, and any collateral adjustments to taxable income or tax liability resulting from the change for each of the taxable years covered by this agreement, are as follows: [insert appropriate adjustments].
(If appropriate), That the taxpayer has filed any amended returns required by section 8.05(4) of Rev. Proc. 2001–46, to reflect the settlement.
That the Service will not require the taxpayer to change its method of accounting for track structure expenditures to a method other than the track maintenance allowance method for any taxable year for which a federal income tax return has been filed as of the date of this closing agreement, provided that: (a) the taxpayer has complied with all the applicable provisions of the closing agreement; (b) there has been no taxpayer fraud, malfeasance, or misrepresentation of a material fact; (c) there has been no change in the material facts on which the closing agreement was based; and (d) there has been no change in the applicable law on which the closing agreement was based.
That the Service is not precluded from challenging the computation of the track maintenance allowance for any taxable year covered by this closing agreement on a basis unrelated to the track maintenance allowance method (for example, that all or a portion of the amount is not incurred under § 461 or that the taxpayer has not properly applied the uniform capitalization rules of § 263A and the regulations thereunder).
That the taxpayer accepts this settlement and agrees to the applicable terms of Rev. Proc. 2001–46.

This agreement is final and conclusive except: (1) The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of a material fact; (2) It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including any stated exception for § 7122) notwithstanding any law or rule of law; and (3) If it relates to a tax period ending after the date of this agreement, it is subject to any law enacted after the agreement date, that applies to the tax period.

By signing, the parties certify that they have read and agreed to the terms of this document.

September 10, 2001 270 2001–37 I.R.B.

Taxpayer (other than individual):

By: ______________________________ Date: __________________

Title: _____________________________

Commissioner of Internal Revenue:

By: ______________________________ Date: __________________

Title: _____________________________

Instructions

[This agreement must be signed and filed in triplicate. (All copies must have original signatures.) The original and copies of the agreement must be identical. The name of the taxpayer must be stated accurately. The agreement may relate to one or more years.

If an attorney or agent signs the agreement for the taxpayer, the power of attorney (or a copy) authorizing that person to sign must be attached to the agreement.

If the taxpayer is a corporation, the agreement must be dated and signed with the name of the corporation, the signature and title of an authorized officer or officers, or the signature of an authorized attorney or agent. It is not necessary that a copy of an enabling corporate resolution be attached.

Use additional pages if necessary and identify them as part of this agreement.

Please see Rev. Proc. 68–16 (1968–1 C.B. 770) for a detailed description of practices and procedures applicable to most closing agreements.]

I have examined the specific matters involved and recommend the acceptance of the proposed agreement

(Receiving Officer) ___________________ (Date) _________________

(Title) _____________________________

I have examined the specific matters involved and recommend the acceptance of the proposed agreement

(Receiving Officer) __________________ (Date) _________________

(Title) ____________________________

2001–37 I.R.B. 271 September 10, 2001