SECTION 4. DEFINITIONS

.01 Taxpayer . The term “taxpayer” has the same meaning as the term “person” as defined in § 7701(a)(1) ( e.g., an individual, trust, estate, partnership, association, or corporation) rather than the meaning of the term “taxpayer” as defined in § 7701(a)(14) (any person subject to tax).

.02 Corporation . The term “corporation” includes each member of a consolidated group. However, the common parent of a consolidated group may change the group’s annual accounting period under this revenue procedure if every member of the consolidated group meets all the requirements and complies with all the conditions of this revenue procedure.

.03 Pass-through Entity . For purposes of this revenue procedure, the term “passthrough entity” means a partnership; an S corporation (as defined in § 1361); an electing S corporation ( i.e., a corporation attempting to make an S election for the first effective year); a trust; an estate; a common trust fund (as defined in § 584); a controlled foreign corporation (CFC) (as defined in § 957), but only to the extent the taxpayer is a U.S. shareholder (as defined in § 951(b)); a foreign personal holding company (FPHC) (as defined in § 552), but only to the extent the taxpayer is a U.S. shareholder (as defined in § 551(a)); a passive foreign investment company (PFIC), but only to the extent the taxpayer has elected to treat the PFIC as a qualified electing fund (as defined in § 1295); a closely-held REIT (as defined in § 6655(e)(5)(B)), but only if the taxpayer is described in § 6655(e)(5)(A)); or any other similar entity.

.04 Required Taxable Year . The “required taxable year” is the particular taxable year that certain taxpayers are

(1) In general .

2002–22 I.R.B. 1049 June 3, 2002

the purpose of scheduling any type of examination of the return. An examination ends:

(i) in a case in which the Service accepts the return as filed, on the date of the “no change” letter sent to the taxpayer;

(ii) in a fully agreed case, on the earliest of the date the taxpayer executes a waiver of restrictions on assessment or acceptance of overassessment (for example, a Form 870, 4549, or 4605), the date the taxpayer makes a payment of tax that equals or exceeds the proposed deficiency, or the date of the “closing” letter (for example, Letter 891(IN) or 987(DO)) sent to the taxpayer; or

(iii) in an unagreed or a partially agreed case, on the earliest of the date the taxpayer (or its representative) is notified by an appeals officer that the case has been referred to an area office from a field office, the date the taxpayer files a petition in the Tax Court, the date on which the period for filing a petition with the Tax Court expires, or the date of the notice of claim disallowance.

(b) An examination does not end as a result of the early referral of an issue to an area office under the provisions of Rev. Proc. 96–9, 1996–1 C.B. 575, or Rev. Proc. 99–28, 1999–2 C.B. 109.

(c) An examination resumes on the date the taxpayer (or its representative) is notified by an appeals officer (or otherwise) that the case has been referred to a field office for reconsideration.

(2) Partnerships and S corporations subject to TEFRA . For an entity (including a limited liability company) treated as a partnership or an S corporation that is subject to the TEFRA unified audit and litigation provisions (note that an S corporation is not subject to the TEFRA unified audit and litigation provisions for taxable years beginning after December 31, 1996, see Small Business Job Protection Act of 1996, Pub. L. No. 104–188, § 1317(a), 110 Stat. 1755, 1787 (1996)), an examination begins on the date of the notice of the beginning of an administrative proceeding sent or personally delivered to the Tax Matters Partner/Tax Matters Person (TMP). An examination ends:

(a) in the case in which the Service accepts the partnership or S corporation return as filed, on the date of the “no adjustments” letter or the “no change”

(1) During an examination . A taxpayer’s annual accounting period is an issue under consideration for the taxable years under examination if the taxpayer receives written notification (for example, by examination plan, information document request (IDR), or notification of proposed adjustments or income tax examination changes) from the examining officer(s) specifically citing the taxpayer’s annual accounting period as an issue under consideration. For example, a taxpayer’s annual accounting period is an issue under consideration as a result of an examination plan that identifies the propriety of the taxpayer’s annual accounting period as a matter to be examined. The question of whether the taxpayer’s annual accounting period is an issue under consideration may be referred to the national office as a request for technical advice under the provisions of Rev. Proc. 2002–2, 2002–1 I.R.B. 82 (or any successor), or, for exempt organizations, Rev. Proc. 2002–5, 2002–1 I.R.B. 173 (or any successor).

(2) Before an area office . A taxpayer’s annual accounting period is an issue under consideration for the taxable years before an area office if the taxpayer’s annual accounting period is included as an item of adjustment in the examination report referred to an area office or is specifically identified in writing to the taxpayer by an area office.

(3) Before a federal court . A taxpayer’s annual accounting period is an issue under consideration for the taxable years before a federal court if the taxpay

notice of the final administrative adjustment sent to the TMP;

(b) in a case in which no formal notice is given, on the date on which the period under § 6229 expires;

(c) in a fully agreed case, when all the partners or shareholders execute a Form 870–P, 870–L, 870–S, or any variation thereof; or

(d) in an unagreed or a partially agreed case, on the earliest of the date the TMP (or its representative) is notified by an appeals officer that the case has been referred to an area office from a field office, the date the TMP (or a partner or shareholder) requests judicial review, or the date on which the period for requesting judicial review expires.

er’s annual accounting period is an item included in the statutory notice of deficiency, the notice of claim disallowance, the notice of final administrative adjustment, the pleadings (for example, the petition, complaint, or answer) or amendments thereto, or is specifically identified in writing to the taxpayer by the government counsel.