SECTION 3. SIGNIFICANT CHANGES

Significant changes to Rev. Proc. 66– 50, as modified by Rev. Proc. 81–40, include:

.01 Section 4.01 of this revenue procedure provides that this revenue procedure is the exclusive procedure for individuals within its scope to automatically change their annual accounting period to the calendar year;

.02 Section 4.02 of this revenue procedure does not limit the scope of this revenue procedure to individuals who receive only certain listed types of income;

.03 Section 4.02(2) of this revenue procedure retains the general rule of Rev. Proc. 66–50 that precluded the use of the automatic change procedures by individuals deriving income from interests in pass-through entities, but provides that interests in passthrough entities will be disregarded in certain circumstances;

.04 Section 6 of this revenue procedure imposes additional terms and conditions similar to those of Rev. Proc. 2002– 37, Rev. Proc. 2002–38, and Rev. Proc. 2002–39. These terms and conditions include:

(1) a limitation on the carryback of net operating losses over $10,000 or general business credits that are generated in the short period; and

(2) a requirement that certain related entities concurrently change their annual accounting period to the new calendar taxable year of the individual owner.

.05 Section 7.02 of this revenue procedure extends the due date for filing a Form 1128 under this automatic revenue procedure to the due date of the individual’s federal income tax return (including extensions) for the first effective year, as defined in section 5.03.