SECTION 9. EFFECT — Internal Revenue Bulletin 2002-17

DOCUMENTS

Rev. Proc. 2002–9 is modified and amplified to include this accounting method change in section 2 of the APPENDIX.

April 29, 2002 806 2002–17 I.R.B.

DRAFTING INFORMATION

The principal author of this revenue procedure is Mark Pitzer of the Office of

Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue procedure,

contact Charlotte Chyr at (202) 622–3110 (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, [ insert taxpayer’s name, address, telephone number, and identifying number ] (“the taxpayer”) and the Commissioner of Internal Revenue (“the Commissioner”) make the following closing agreement:

WHEREAS:

The accounting method issue covered by this closing agreement is the taxpayer’s method of accounting for the cost of its qualifying vehicles’ original and replacement tires. The definitions of qualifying vehicle, original tires, and replacement tires set forth in section 3 of Rev. Proc. 2002–27, apply for purposes of this closing agreement.
The taxable year(s) covered by this closing agreement are [ insert applicable taxable year(s) covered by the agreement ].
Under the taxpayer’s present method of accounting for the cost of its qualifying vehicles’ original and replacement tires, the taxpayer [ describe in detail the taxpayer’s current method of accounting being changed: for example, “deducts the cost of its quali- fying vehicles’ original and replacement tires when purchased” ].
The taxpayer and the Commissioner relied on the following facts and representations in making this closing agreement: [ insert relevant facts, including the amounts capitalized or deducted under the original tire capitalization method for each taxable year under examination, before an area appeals office, or before the Tax Court, an explanation of the computations used to determine those amounts, and a statement of whether the amounts capitalized or deducted for each of those taxable years is taken into account for federal income tax purposes ].
[ If applicable, insert: ] The taxpayer has filed an amended return(s) for the taxable year(s) ended [ insert applicable affected succeeding taxable year(s) for which a federal income tax return has been filed as of the date of the closing agreement ] to reflect the change in method of accounting for the cost of the qualifying vehicles’ original and replacement tires described in this closing agreement.
[ If applicable, insert: ] A stipulated decision has been entered by the [ insert name of federal court ] with respect to the taxable year(s) ended [ insert date(s) ] that reflects taxable income for such year(s) computed using the original tire capitalization method described in section 5 of Rev. Proc. 2002–27 for the cost of the qualifying vehicles’ original and replacement tires.

NOW IT IS HEREBY DETERMINED AND AGREED for federal income tax purposes:

That the Service is changing the taxpayer’s method of accounting for the cost of its qualifying vehicles’ original and replacement tires to the original tire capitalization method of accounting described in section 5 of Rev. Proc. 2002–27, for the taxable year ended [ insert earliest open taxable year after which there is no closed taxable year ].
That the change in method of accounting is to be made on a cut-off basis.
That the adjustment(s) to tax attributable to the adjustment(s) to taxable income resulting from the change in the method of accounting for the cost of the qualifying vehicles’ original and replacement tires (including the current year adjustment(s) and any collateral adjustments to taxable income or tax liability resulting from the change) for each taxable year covered by the closing agreement are as follows: [ insert the adjustments to each taxable year covered by the closing agreement in table form ].
That the change in method of accounting for the cost of the qualifying vehicles’ original and replacement tires is a change in method of accounting within the meaning of Rev. Proc. 2002–27. As such, the provisions of § 446 and the regulations thereunder apply to the original tire capitalization method of accounting described in section 5 of Rev. Proc. 2002–27 for the cost of the qualifying vehicles’ original and replacement tires.
That, under section 7.02(4) of Rev. Proc. 2002–27, the Service will not require the taxpayer to change its method of accounting for the cost of its qualifying vehicles’ original and replacement tires to a method other than the original tire capitalization method for [ insert taxable year(s) 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 this 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 this closing agreement was based; and (d) there has been no change in the applicable law on which this closing agreement was based.
That the Service is not precluded from challenging the computation of the amounts capitalized or deducted for any taxable year covered by this closing agreement on a basis unrelated to the original tire capitalization method (for example, that all or a portion of the cost of a qualifying vehicle’s original or replacement tires is not incurred under § 461).

2002–17 I.R.B. 807 April 29, 2002

[ If applicable, insert: ] That the following additional conditions also apply: [ insert, for example, conditions with respect to waiving restrictions on assessment and collection, paying any tax, abating any overassessment, or refunding or crediting any tax overpayment ].
That the taxpayer accepts this settlement and agrees to the applicable terms of Rev. Proc. 2002–27. 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.

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.

April 29, 2002 808 2002–17 I.R.B.