SECTION 7. DRAFTING

INFORMATION

The principal author of this revenue procedure is W. Thomas McElroy, Jr., of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Mr. McElroy at (202) 622–4970 (not a toll-free call).

able years under examination, before an appeals office, or before a federal court, at the time the Form 3115 is filed with the national office, the audit protection of section 7 of Rev. Proc. 2002–9 does not apply. A taxpayer’s NAE method of accounting 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, or notification of proposed adjustments or income tax examination changes) from the examining agent(s) specifically citing the treatment of the NAE method of accounting as an issue under consideration.

(b) The designated automatic accounting method change number for changes in method of accounting made pursuant to this revenue procedure is No. 35; and

(c) A change in method of accounting within section 3.01(1), (2), (3), or (5) of this revenue procedure results in a § 481(a) adjustment. A change in method of accounting within section 3.01(4) of this revenue procedure is made on a cut-off basis.

(2) Concurrent change to overall ac- crual method and a NAE method of ac- counting .

(a) First § 448 year . A taxpayer that is within the scope of section 3.01(1) through (5) of this revenue procedure that wants to change to a NAE method of accounting (with or without also changing to a periodic system) and is required to change to an overall accrual method of accounting under § 448 and the regulations thereunder must request to make both changes by filing one Form 3115, and the taxpayer must follow the change in method of accounting provisions of § 1.448–1(h)(2). The taxpayer must complete all applicable sections of Form 3115, including sections that apply to the change to an overall accrual method and to the change to the NAE method, and must enter the automatic accounting method change numbers for both changes on Form 3115.

(b) Other automatic consent changes to overall accrual method . A taxpayer that is within the scope of section 3.01(1) through (5) of this revenue procedure that wants

to change to a NAE method of accounting (with or without also changing to a periodic system) and is eligible to change to an overall accrual method of accounting under Appendix section 5.01 of Rev. Proc. 2002–9, or its successor, must request to make both changes by filing one Form 3115, and must follow the change in method of accounting provisions under Rev. Proc. 2002–9, or its successor. The taxpayer must complete all applicable sections of Form 3115, including sections that apply to the change to an overall accrual method and to the change to the NAE method, and must enter the automatic accounting method change numbers for both changes on Form 3115.

.02 Advance consent change in method of accounting .

(1) In general . A taxpayer within the scope of sections 3.01(6) or (7) of this revenue procedure must follow the advance consent change in method of accounting procedures in Rev. Proc. 97–27, or its successor.

(2) Concurrent change to an overall ac- crual method of accounting and a NAE method of accounting . A taxpayer within the scope of section 3.01(6) or (7) of this revenue procedure that wants to change to a NAE method of accounting (with or without also changing to a periodic system) and also wants to change to an overall accrual method of accounting or to an overall accrual method in conjunction with the recurring item exception for which the change to the overall accrual method is not allowed under an automatic consent procedure, must request to make both changes by filing one Form 3115, and must follow the change in method of accounting provisions in Rev. Proc. 97–27, or its successor. Only one user fee is required for these changes. The taxpayer must complete all applicable sections of Form 3115, including the sections that apply to the change to an overall accrual method, and to the change to the NAE method.

.03 Procedures for certain adoptions by taxpayers .

(1) In general . Normally, taxpayers are not required to obtain advance consent in

2006–52 I.R.B. 1170 December 26, 2006