SECTION 13. DEFERRED

COMPENSATION (§ 404)

.01 Change to comply with § 404(a)(11) .

(1) Description of change . This change applies to a taxpayer that wants to change its method of accounting to comply with § 404(a)(11). Section 404(a)(11) provides that, for purposes of determining under § 404 whether compensation of an employee is deferred compensation and when deferred compensation is paid, no amount is treated as received by the employee, or paid, until it is actually received by the employee. Section 404(a)(11) overturns the decision in Schmidt Baking Co., Inc.

.06 Change in allocating environmental remediation costs under § 263A .

(1) Description of change . This change applies to a taxpayer that capitalizes environmental remediation costs to inventory under § 263A, but allocates these costs to inventory using a method of accounting that does not comply with the holding in Rev. Rul. 2005–42, 2005–2 C.B. 67, and wants to change to allocating these costs to inventory produced during the taxable year in which the costs are incurred under § 263A. See Rev. Rul. 2005–42 for further information.

(2) Concurrent automatic changes . A taxpayer that wants to make both this change and another automatic change in method of accounting under § 263A for the same year of change may file a single Form 3115 for both changes, provided the taxpayer enters the designated automatic accounting method change numbers for both changes on the appropriate line on that Form 3115, and complies with the ordering rules of § 1.263A–7(b)(2).

(3) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under section 11.06 of this APPENDIX is “92.” See section 6.02(4) of this revenue procedure. (4) Contact information . For further information regarding a change under this section, contact John Faron at 202–622–4930 (not a toll-free call). .07 Safe harbor methods under § 263A for certain dealerships of motor vehicles .

(1) Description of change . This change applies to a motor vehicle dealership, as defined in section 4 of Rev. Proc. 2010–44, 2010–49 I.R.B. 811, that is within the scope of section 3 of Rev. Proc. 2010–44 and wants to change its method of accounting to (1) treat its sales facility as a retail sales facility or (2) be treated as a reseller without production activities, as described in section 5 of Rev. Proc. 2010–44. A motor vehicle dealership that wants to make an automatic change in method of accounting to use one or both safe harbor methods described in section 5 of Rev. Proc. 2010–44 may make any corresponding changes in the identification of costs subject to § 263A that will be accounted for using the new method (for example, to remove internal profit from inventory costs) or to no longer include negative amounts as additional § 263A

costs in the numerator of the simplified resale method formula or the simplified production method formula. However, except as provided in the preceding sentence, a change under this section does not include a change for purposes of recharacterizing “§ 471 costs” as “additional § 263A costs” (or vice versa ) under the simplified resale method or the simplified production method.

(2) Certain scope limitations temporar- ily inapplicable . The scope limitations in sections 4.02(1) through (4) and (7) of this revenue procedure do not apply to a motor vehicle dealership that changes to one or both of the safe harbor methods in section 5 of Rev. Proc. 2010–44 for its first or second taxable year ending after November 9, 2010. (3) Concurrent automatic changes . A motor vehicle dealership making an automatic change in method of accounting to one or both safe harbor methods described in section 5 of Rev. Proc. 2010–44 and another automatic change in method of accounting under § 263A for the same taxable year may file one Form 3115 to make both changes, provided the dealership enters the designated automatic change numbers for all such changes in Part I on that Form 3115, and complies with the ordering rules of § 1.263A–7(b)(2).

(4) Multiple adjustments . In the event that a motor vehicle dealership is taking into account a § 481(a) adjustment from another accounting method change in addition to the § 481(a) adjustment required by a change to a safe harbor method described in section 5 of Rev. Proc. 2010–44, the § 481(a) adjustments must be taken into account separately. For example, a motor vehicle dealership that changed to comply with § 263A in 2009 and was required to take its § 481(a) adjustment into account over four years must continue to take into account that adjustment over the remainder of that four year § 481(a) adjustment period even though the dealership changed to a safe harbor method described in section 5 of Rev. Proc. 2010–44 in 2010 and has an additional § 481(a) adjustment required by that change.

(5) Designated automatic accounting method change numbers . The designated automatic accounting method change number for a change to treat certain sales facilities as retail sales facilities as de

2011–4 I.R.B. 388 January 24, 2011

ing under this section 13.02 of the APPENDIX if the taxpayer is not capitalizing these costs, unless the taxpayer concurrently changes its method to capitalize these costs in conjunction with a change to a UNICAP method under section 11.01 or 11.02 of this APPENDIX (as applicable). (2) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under section 13.02 of this APPENDIX is “28.” See section 6.02(4) of this revenue procedure. (3) Contact information . For further information regarding a change under this section, contact Maryellen Furr at 202–622–6030 (not a toll-free call). .03 Grace period contributions . (1) Description of change . This change applies to a taxpayer that wants to cease deducting contributions made during the § 404(a)(6) grace period to a qualified cash or deferred arrangement within the meaning of § 401(k) or to a defined contribution plan as matching contributions with the meaning of § 401(m) when the contributions are attributable to compensation earned by plan participants after the end of a taxable year as required by Rev. Rul. 2002–46, 2002–2 C.B. 117, as modified by Rev. Rul. 2002–73, 2002–2 C.B. 805.

(2) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under section 13.03 of this APPENDIX is “29.” See section 6.02(4) of this revenue procedure. (3) Contact information . For further information regarding a change under this section, contact James Holland at 202–283–9699 or Carlton Watkins at 202–283–9625 (not toll-free calls).