SECTION 4. WAIVER OF TWO-YEAR

RULE IN REV. RUL. 90–38

.01 In general . If a taxpayer uses an impermissible method of determining depreciation for a depreciable property, the taxpayer adopts that method of accounting for the property when the taxpayer treats the property in the same way in determining gross income or deductions in two or more consecutively filed federal tax returns. Accordingly, the taxpayer changing from that impermissible method of accounting must file a Form 3115 in accordance with the requirements of § 1.446–1(e)(3)(i) and, as applicable, Rev. Proc. 97–27 or Rev. Proc. 2002–9. See Rev. Rul. 90–38.

.02 Waiver of two-year rule . Notwithstanding Rev. Rul. 90–38, a taxpayer may file a Form 3115 under Rev. Proc. 97–27 or Rev. Proc. 2002–9, as applicable, to change from an impermissible method of accounting for depreciation to a permissible method of accounting for depreciation under § 1.446–1(e)(2)(ii)( d ) for any depreciable property subject to § 1.446–1(e)(2)(ii)( d ) and placed in service by the taxpayer in the taxable year immediately preceding the year of change (as defined in section 5.02(2) of Rev. Proc. 97–27 or section 5.02 of Rev. Proc. 2002–9, as applicable) (hereinafter, this property is referred to as “1-year depreciable property”), provided the additional term and condition in section 4.03 of this revenue procedure is satisfied. Alternatively, the taxpayer may make the change from the impermissible depreciation method to the permissible depreciation method for the 1-year depreciable property by filing an amended federal tax return for the placed-in-service year prior to the date the taxpayer files its federal tax return for the taxable year succeeding the placed-in-service year.

.03 Additional term and condition for filing a Form 3115 . In addition to the terms and conditions provided in Rev. Proc. 97–27 or Rev. Proc. 2002–9, as applicable, the § 481 adjustment reported on a Form 3115 that is filed by a taxpayer in accordance with section 4.02 of this revenue procedure to make a change in method of accounting for depreciation un

2007–4 I.R.B. 360 January 22, 2007

for a Form 3115 filed for the taxable years ending on or after December 26, 2006, except that:

(1) the change made to section 8.01 of Rev. Proc. 2000–50 providing that a change in useful life under the method described in section 6.01(2) of Rev. Proc. 2000–50 is a change in method of accounting is effective for property placed in service by the taxpayer in a taxable year ending on or after December 30, 2003; and

(2) the change made to section 8.01 of Rev. Proc. 2000–50 providing that a change in useful life to 36 months made by a taxpayer that is currently treating costs paid or incurred to develop computer software under section 5.01(2) of Rev. Proc. 2000–50 in accordance with the rules provided in § 167(f)(1) and the regulations thereunder but is not currently using a useful life of 36 months is a change in method of accounting is effective for property placed in service by the taxpayer in a taxable year ending on or after December 30, 2003.