SECTION 6. CHANGE IN METHOD

OF ACCOUNTING

.01 In General . A change in a taxpayer’s treatment of the cost of a qualifying vehicle’s original tires and replacement

2002–17 I.R.B. 803 April 29, 2002

(3) The change to the original tire capitalization method will be made using a “cut-off method.” Under the cut-off method, only a qualifying vehicle’s original and replacement tires placed in service by a taxpayer on or after the beginning of the year of change are accounted for under the original tire capitalization method. A qualifying vehicle’s original and replacement tires placed in service by the taxpayer before the year of change continue to be accounted for under the taxpayer’s former method of accounting. Because no items are duplicated or omitted from income when the cut-off method is used to effect a change in accounting method, no § 481(a) adjustment is necessary.

.03 Issue Under Consideration or Issue Pending . If a taxpayer within the scope of this revenue procedure wants to change to the original tire capitalization method for its year of change (as defined in section 6.02 of this revenue procedure) and the treatment of its qualifying vehicle’s original tires or replacement tires is an issue under consideration in examination, before an area appeals office, or before a federal court (within the meaning of section 3.09 of Rev. Proc. 2002–9), or is an issue pending in examination (within the meaning of section 6.03(6) of Rev. Proc. 2002–9), on April 3, 2002, the taxpayer must follow the automatic change in method of accounting provisions in Rev. Proc. 2002–9 (or its successor) with the following modifications:

(1) The scope limitations in section 4.02 of Rev. Proc. 2002–9 do not apply. The taxpayer must provide a copy of the Form 3115 to the examining officer, appeals officer, or government counsel (whichever is applicable) at the same time it files the copy of the Form 3115 with the national office. The Form 3115 must contain the name(s) and telephone number(s) of the examining officer, appeals officer, or government counsel, as appropriate.

(2) To assist the Service in processing changes in method of accounting under this section of the revenue procedure, and to ensure proper handling, section 6.02(4)(a) of Rev. Proc. 2002–9 is modified to require that a Form 3115 filed under this revenue procedure include the statement: “Automatic Change Filed Under Rev. Proc. 2002–27.” This state

ment should be legibly printed or typed on the appropriate line on any Form 3115 filed under this revenue procedure.

(3) The change to the original tire capitalization method will be made using a cut-off method. Under the cut-off method, only a qualifying vehicle’s original and replacement tires placed in service by a taxpayer on or after the beginning of the year of change are accounted for under the original tire capitalization method. A qualifying vehicle’s original and replacement tires placed in service by the taxpayer before the year of change continue to be accounted for under the taxpayer’s former method of accounting. But see section 6.03(4) of this revenue procedure. Because no items are duplicated or omitted from income when the cut-off method is used to effect a change in accounting method, no § 481(a) adjustment is necessary.

(4) Section 7 of Rev. Proc. 2002–9 does not apply. The taxpayer does not receive audit protection in connection with a change to the original tire capitalization method. Accordingly, the Service may require the taxpayer to change its method of accounting for a qualifying vehicle’s original and replacement tires for any taxable year before the year of change.

.04 Special Rule for Certain Taxpayers with Issue Under Consideration or Issue Pending . If a taxpayer is within the scope of this revenue procedure and the treatment of its qualifying vehicle’s original tires or replacement tires is an issue under consideration (within the meaning of section 3.09 of Rev. Proc. 2002–9) in examination, before an area appeals office, or before the Tax Court, or is an issue pending in examination (within the meaning of section 6.03(6) of Rev. Proc. 2002–9), on April 3, 2002, the taxpayer may change to the original tire capitalization method for its first or second taxable year ending on or after December 31, 2001, under section 6.03 of this revenue procedure or, alternatively, for an earlier taxable year under section 7 of this revenue procedure. See also section 6.05 of this revenue procedure for deemed consent situations.

.05 Special Rule for Certain Taxpayers Deemed to Have Obtained Consent . A taxpayer within the scope of this revenue procedure will be deemed to have obtained the consent of the Commissioner

to change to the original tire capitalization method (as described in section 5 of this revenue procedure) for all of its qualifying vehicles’ original tires and replacement tires placed in service before the year of change (as defined in section 6.02 of this revenue procedure) if: (1) the taxpayer treated these tires in the same manner as permitted under the original tire capitalization method in all taxable years since the tires were placed in service by the taxpayer; or (2) the taxpayer changed its treatment of these tires in a taxable year ending on or before December 31, 2001, for which an original federal income tax return has been filed as of April 3, 2002, to the original tire capitalization method, with or without a § 481(a) adjustment, and treated the tires under that method in all taxable years since the taxpayer changed to the original tire capitalization method. Any taxpayer described in this section 6.05 will be deemed to have obtained the consent of the Commissioner to change to the original tire capitalization method as of the beginning of the first taxable year in which the taxpayer used the original tire capitalization method, and is not required to file a Form 3115 under this section 6. However, if the taxpayer’s treatment of its qualifying vehicle’s original tires or replacement tires is an issue under consideration in examination, before an area appeals office, or before a federal court (within the meaning of section 3.09 of Rev. Proc. 2002–9), or is an issue pending in examination (within the meaning of section 6.03(6) of Rev. Proc. 2002–9), on April 3, 2002, the taxpayer does not receive audit protection in connection with the change to the original tire capitalization method. Accordingly, the Service may require the taxpayer to change its method of accounting for a qualifying vehicle’s original and replacement tires for any taxable year before the first taxable year in which the taxpayer used the original tire capitalization method. The procedures in section 7 of this revenue procedure apply for any taxable year before the first taxable year in which the taxpayer used the original tire capitalization method if the taxpayer’s treatment of its qualifying vehicle’s original tires or replacement tires is an issue under consideration in examination, before an area

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appeals office, or before the Tax Court, or is an issue pending in examination, on April 3, 2002.

.06 Changes Not Made under this Rev- enue Procedure . A taxpayer that wants to change to the original tire capitalization method described in section 5 of this revenue procedure that does not change its method of accounting under section 6 or 7 of this revenue procedure must follow the change in method of accounting provisions in Rev. Proc. 2002–9 (or any successor). This change must be made with a § 481(a) adjustment.