SECTION 18. SPECIAL RULES FOR

LONG-TERM CONTRACTS (§ 460)

.01 Change from exempt-contract method to percentage-of-completion method .

(1) Description of change . This change applies to a taxpayer that:

(a) is not required by § 460 and regulations thereunder to use the percentageof-completion method to account for its long-term contracts, and

(b) wants to change its method of accounting for long-term contracts from an exempt-contract method properly applied ( see § 1.460–4(c)) to the percentage-ofcompletion method ( see § 1.460–4(b)).

(2) Manner of making change . This change is made on a cut-off basis and applies only to long-term contracts entered into on or after the beginning of the year of change. See § 1.460–1(c)(2) for a description of when a contract is treated as “entered into.” See section 2.06 of this revenue procedure for more information regarding a cut-off basis. Accordingly, a § 481(a) adjustment is neither permitted nor required.

(3) No audit protection . The taxpayer does not receive audit protection under section 7 of this revenue procedure in connection with this change.

(3) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under section 18.01 of this APPENDIX is “41.” See section 6.02(4) of this revenue procedure.

(4) Contact information . For further information regarding a change under this section, contact Lore Cavanaugh at 202–622–4960 (not a toll-free call).

.02 Reserved .