SECTION 5. FOUR-YEAR SPREAD

PERIOD

.01 A partner or S corporation shareholder within the scope of this revenue procedure may elect to take into account its share of income from the short taxable year of the partnership or S corporation ratably over a four-year period.

.02 A partner or S corporation shareholder within the scope of this revenue procedure that elects a ratable four-year spread period under this revenue procedure must apply the provisions of § 1.702–3T (b), (d), (e), (f) and (g) with the following modifications for purposes of this section:

(1) the term “partner” in §1.702–3T means any partner or S corporation shareholder within the scope of this revenue procedure;

(2) the term “partnership” includes S corporations;

(3) the term “distributive share” includes a shareholder’s pro rata share of S corporation items; and

(4) references to “section 806 of the 1986 Act” should be replaced with “Rev. Proc. 2002–38 or Rev. Proc. 2002–39, whichever applies.”