SECTION 13. EFFECT — Internal Revenue Bulletin 2008-36

DOCUMENTS

Rev. Proc. 2002–9 is clarified, modified, amplified, and superseded.

Section 6.02(1)(a) of Rev. Proc. 2001–10, 2001–1 C.B. 272, as modified by Announcement 2004–16, 2004–1 C.B. 668, and section 7.02(1)(a) of Rev. Proc. 2002–28, 2002–1 C.B. 815, as modified by Announcement 2004–16, are modified and amplified to provide that the scope limitations of section 4.02 of this revenue procedure apply to a change to the cash method.

Rev. Proc. 2007–14, 2007–4 I.R.B. 357, is superseded.

2008–36 I.R.B. 619 September 8, 2008

Proc. 2002–28, as modified by Announcement 2004–16;

(15) Section 14.05 of the APPENDIX of this revenue procedure, regarding interest accruals on short-term consumer loansRule of 78’s method, is modified by removing the date limitations for the loans to which the change relates;

(16) Section 18.01 of the APPENDIX of this revenue procedure clarifies that the change to the percentage-of-completion method must be from an exempt-contract method properly applied;

(17) Section 19.01(1) of the APPENDIX of this revenue procedure, relating to changes involving timing of incurring liabilities for self-insured employee medical benefits, is modified to include method changes involving liabilities to pay a third party service provider;

(18) Section 19.02 of the APPENDIX of this revenue procedure, relating to changes involving timing of incurring liabilities for real property and personal property taxes is modified to include method changes for state franchise taxes;

(19) Section 19.03 of the APPENDIX of this revenue procedure, relating to changes involving timing of incurring liabilities under a workers’ compensation act, tort, breach of contract, or violation of law, is modified to include method changes involving payments made by a third party;

(20) Section 19.04 of the APPENDIX of this revenue procedure, relating to changes involving timing of incurring certain liabilities for payroll taxes imposed with respect to year-end wages, is modified to include method changes for payroll taxes imposed with respect to other forms of compensation (including bonuses and vacation pay) to the safe harbor method provided in Rev. Proc. 2008–25, 2008–13 I.R.B. 686;

(21) Section 21.05 of the APPENDIX of this revenue procedure is modified to expand the types of impermissible inventory methods from which a taxpayer may change;

(22) Section 22.01 of the APPENDIX of this revenue procedure, regarding changes from the LIFO inventory method, is modified to expand the permitted methods to which a taxpayer may change;

(23) Section 22.02 of the APPENDIX of this revenue procedure, regarding determining current-year cost under the

or business is determined without regard to whether the § 481(a) adjustment is positive or negative or whether the change is made on a cut-off method;

(2) Sections 4.02(6) and 4.02(7) of this revenue procedure provide separate prior five-year change scope limitations for an overall method change and for a change relating to a specific item;

(3) Section 5.06 of this revenue procedure provides additional terms and conditions applicable to certain foreign corporations;

(4) Section 6.02(1)(c) of this revenue procedure amplifies the requirements for a complete application ( e.g., Form 3115);

(5) Section 6.02(3)(b) provides timely duplicate filing requirements for certain foreign corporations;

(6) The requirements regarding designated automatic accounting method change numbers are incorporated. See section 6.02(4) of this revenue procedure. A designated automatic accounting method change number is assigned to each change in the APPENDIX of this revenue procedure;

(7) Explanations of how to implement a change on a cut-off basis are added to various sections of the APPENDIX that require the use of the cut-off basis. See, e.g., sections 2.01, 6.03, and 22.06 of the APPENDIX of this revenue procedure;

(8) Section 6.03 of the APPENDIX of this revenue procedure, relating to sale or lease transactions, is modified to include financing arrangements;

(9) The following sections of the APPENDIX of this revenue procedure are modified to include taxpayers not complying with the capitalization requirements of § 263A for the costs to which the change applies if the change is made in conjunction with a change to a UNICAP method under section 11.01 or 11.02 of the APPENDIX of this revenue procedure:

(a) Section 6.01, relating to changes from impermissible to permissible methods of accounting for depreciation or amortization;

(b) Section 6.02, relating to changes from permissible to permissible methods of accounting for depreciation;

(d) Section 19.01(1), relating to changes for self-insured employee medical benefits;

(e) Section 19.02, relating to changes involving the timing of incurring liabilities for real property taxes, personal property taxes, state income taxes, and state franchise taxes;

(f) Section 19.03, relating to changes involving the timing of incurring liabilities under a workers’ compensation act, tort, breach of contract, or violation of law; and

(g) Section 19.04, relating to changes involving the timing of incurring certain liabilities for payroll taxes;

(10) Section 11.01(1)(b)(ii) of the APPENDIX of this revenue procedure, relating to changes to certain UNICAP methods used by resellers and reseller-producers, is clarified to state that the change applies to a small reseller changing from the historic absorption ratio with the simplified resale method to a permissible non-UNICAP inventory capitalization method under section 11.01(1)(a)(i) of the APPENDIX of this revenue procedure;

(11) Section 11.02 of the APPENDIX of this revenue procedure, relating to certain UNICAP methods used by producers and reseller-producers, is clarified to state that the change does not apply to a producer or reseller-producer that wants to change its method of accounting for interest capitalization;

(12) Sections 14.01 and 14.09 of the APPENDIX of this revenue procedure provide separate changes for changes from the overall cash method to an overall accrual method and for changes from the cash method to an accrual method for one or more specific items. Sections 14.01 of the APPENDIX of this revenue procedure is modified to (a) eliminate changes from a hybrid method, (b) include changes for a taxpayer’s first § 448 year; and (c) permit changes for farmers;

(13) Section 14.01(1)(b)(v)(A) of the APPENDIX of this revenue procedure clarifies that a taxpayer may change, as well as adopt or continue to use, certain inventory methods in conjunction with the change to an overall accrual method;

(14) Section 14.03 of the APPENDIX of this revenue procedure is modified to state that the scope limitations in section 4.02 of this revenue procedure apply to changes to the overall cash method provided in Rev. Proc. 2001–10 and Rev.

September 8, 2008 620 2008–36 I.R.B.

DRAFTING INFORMATION

The principal authors of this revenue procedure are Kari Fisher, Karla Meola, and Cheryl Oseekey of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Ms. Fisher, Ms. Meola, or Ms. Oseekey at (202) 622–4970 or (202) 622–4930 (not a toll-free call).

For further information regarding a specific change in method of accounting in the APPENDIX of this revenue procedure, contact the appropriate individual listed in the “Contact Person(s)” section located at the end of each section of the APPENDIX (calls are not toll-free) or see the APPENDIX CONTACT LIST immediately following the APPENDIX. The contact person is with one of the following Offices of Associate Chief Counsel: Corporate (CORP), Financial Institutions and Products (FI&P), Income Tax & Accounting (IT&A), International (INTL), Passthroughs and Special Industries (P&SI), or Tax Exempt and Government Entities (TEGE).

APPENDIX

CHANGES IN METHODS OF ACCOUNTING TO WHICH THIS REVENUE PROCEDURE APPLIES