SECTION 10. CAPITAL

EXPENDITURES (§ 263)

.01 Package design costs . (1) Description of change . (a) Applicability . This change applies to a taxpayer that wants to change its method of accounting for package design costs that are within the scope of Rev. Proc. 97–35, 1997–2 C.B. 448, as modified by Rev. Proc. 98–39, 1998–1 C.B. 1320, to one of the three alternative methods of accounting for package design costs described in section 5 of Rev. Proc. 97–35. The three alternative methods of accounting for package design costs described are: (i) the capitalization method, (ii) the design-by-design capitalization and 60-month amortization method, and (iii) the pool-of-cost capitalization and 48-month amortization method. (b) Inapplicability . This change does not apply to a taxpayer that wants to change to the capitalization method for costs of developing (or modifying) any package design that has an ascertainable useful life.

(2) Additional requirements . If a taxpayer is changing its method of accounting for package design costs to the capitalization method or the design-by-design capitalization and 60-month amortization method, the taxpayer must attach a statement to its timely filed Form 3115. The

dards Institute by the American Society of Heating, Refrigerating, and Air Conditioning Engineers and the Illuminating Engineering Society of North America (as in effect on April 2, 2003, including addenda 90.1a–2003, 90.1b–2002, 90.1c–2002, 90.1d–2002, and 90.1k–2002 as in effect on that date) (Standard 90.1–2001);

(b) energy efficient commercial building property that is installed as part of the interior lighting systems; the heating, cooling, ventilation, and hot water systems; or the building envelope of a commercial building; and

(c) it is certified that the interior lighting systems, heating, cooling, ventilation, and hot water systems, or the building envelope that have been incorporated into the building, or that the taxpayer plans to incorporate into the building subsequent to the installation of such property, will reduce the total annual energy and power costs with respect to combined usage of the building’s heating, cooling, ventilation, hot water, and interior lighting systems by 50 percent or more as compared to a Reference Building that meets the minimum requirements of Standard 90.1–2001.

(3) Manner of making change . A taxpayer making this change must attach a statement with a detailed description of the tax treatment of the property under the taxpayer’s present and proposed methods of accounting.

(4) Additional filing requirement . In addition to the statement required by section 8.04(3) of the APPENDIX of this revenue procedure, a taxpayer making this change must attach a certification as required by section 4 of Notice 2006–52, 2006–1 C.B. 1175, and section 5 of Notice 2008–40, 2008–14 I.R.B. 725, to demonstrate the energy efficient commercial building property has achieved the reduction energy and power costs to qualify for the § 179D deduction. In the case of a publicly owned building for which a designer has been allocated a deduction under § 179D, the designer becomes the taxpayer for purposes of the deduction and must attach a certification as required by Notice 2006–52 and Notice 2008–40, and an allocation from the owner of the building to the designer as required by section 3.04 of Notice 2008–40. (5) No audit protection . A taxpayer does not receive audit protection under

section 7 of this revenue procedure in connection with this change.

(6) Designated automatic accounting method change number . The designated automatic accounting method change number for a change in method of accounting under this section 8.04 of the APPENDIX is “152.” See section 6.02(4) of this revenue procedure.

(7) Contact information . For further information regarding a change under this section, contact Jennifer Bernardini at 202–622–3110 (not a toll-free call).