SECTION 16. SIGNIFICANT — Internal Revenue Bulletin 2011-4

CHANGES

.01 Significant changes to Rev. Proc. 2008–52, include: (1) Section 3.08(1)(c) of this revenue procedure modifies the 120-day window period to provide if a taxpayer is within the 120-day window period, that 120-day window period ends when Appeals refers a case to the examining agent(s) for reconsideration;

(2) Section 3.08(4) of this revenue procedure is clarified to explain that a taxpayer under examination, for purposes of this revenue procedure, continues to be under examination while the taxpayer has a refund or credit under review by the Joint Committee on Taxation. This section further explains when such an examination ends for purposes of this revenue procedure;

(3) Section 3.09(2) of this revenue procedure modifies the rules for a taxpayer with a method of accounting for an item that is an issue under consideration before an appeals office when the appeals office submits a refund or credit to the Joint Committee on Taxation;

(4) Section 3.09(3) of this revenue procedure modifies the rules for a taxpayer with a method of accounting for an item that is an issue under consideration before a federal court when a settlement stipulation is submitted to the Joint Committee on Taxation;

(5) Sections 5.07 and 5.08 of this revenue procedure provide additional terms and conditions applicable to a foreign division of a domestic corporation taxpayer and foreign partnership, respectively;

(6) Section 6.01 of this revenue procedure is clarified to provide that a taxpayer receives the consent of the Commissioner to make a change in method of accounting under the APPENDIX of this revenue procedure if the taxpayer complies with the provisions of this revenue procedure and implements the change on its federal income tax return for the requested year of change to which the original application is attached pursuant to section 6.02(3);

(7) Changes to section 6.02(3) of this revenue procedure:

(a) Section 6.02(3) of this revenue procedure clarifies the filing requirements of this revenue procedure by consolidating

January 24, 2011 355 2011–4 I.R.B.

ified to include method changes involving bonuses that are received by the employee more than 2 ¹ /2 months after the taxable year in which the related services are provided, and that are not deferred compensation;

(18) The following sections of the APPENDIX of this revenue procedure have a subsection that is removed because it is obsolete:

(a) Section 10.06(2), relating to “Scope limitations inapplicable” for changes for rotable spare parts;

(b) Section 14.04(2), relating to “Scope limitations inapplicable” for changes for the nonaccrual-experience method;

(d) Section 15.07(2), relating to “Manner of making change” for changes for advance payments;

(e) Section 19.04(3), relating to “Scope limitations inapplicable” for changes for the timing of incurring certain liabilities for payroll taxes;

(f) Section 21.08(2), relating to “Scope limitations inapplicable” for changes for the replacement cost for heavy equipment dealers’ parts inventory; and

(g) Section 21.10(3), relating to “Scope limitations inapplicable” for changes to the advance trade discount method;

(19) The following sections are the APPENDIX of this revenue procedure are obsolete and are removed from this APPENDIX in their entirety:

(a) Section 6.14, relating to changes in income forecast method of depreciation;

(b) Section 6.15, relating to changes for GO Zone additional first year depreciation deduction;

(d) Section 8.01, relating to changes for the treatment of qualified film and television productions;

(e) Section 8.02, relating to changes for expensing of certain reforestation expenditures;

(f) Section 8.03, relating to changes for the deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations;

(g) Section 9.02, relating to changes for Year 2000 costs; and

(a) Sections 6.24(2)(e) and 6.25(2)(e) are modified to require an additional statement to be provided when making the change in method of accounting; and

(b) Sections 6.24(5) and 6.25(5) are modified to require a copy of the Form 3115 be filed with the IRS in Ogden, UT, in lieu of providing a copy to both the national office and the Ogden office;

(13) Consistent with the Service’s administrative practice, the following sections of the APPENDIX of this revenue procedure are modified to permit concurrent changes on a single Form 3115 when a taxpayer makes a change under the section for more than one asset for the same year of change, and to provide rules for aggregation of the net § 481(a) adjustments:

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

(b) Section 6.04, relating to changes for modern golf course greens;

(d) Section 6.06, relating to changes in depreciation of gas pump canopies;

(e) Section 6.07, relating to a change in depreciation of utility assets;

(f) Section 6.08, relating to a change in depreciation of cable TV fiber optics;

(g) Section 6.10, relating to a change in method of accounting for depreciation due to a change in the use of MACRS property;

(h) Section 6.11, relating to a change in depreciation of qualified non-personal use vans and light trucks;

(i) Section 6.12, relating to a change in depreciation of qualified revitalization building in the expanded area of a renewal community;

(j) Section 6.18, relating to a change in depreciation of MACRS property acquired in a like-kind exchange or as a result of an involuntary conversion; and

(k) Section 6.22, relating to changes in Kansas additional first-year depreciation;

(14) Consistent with the Service’s administrative practice, the following sections of the APPENDIX of this revenue procedure are modified to permit a taxpayer to make concurrent changes in method of accounting on a single Form 3115 for these changes: (a) Section 6.01, relating to changes from impermissible to permissible meth

ods of accounting for depreciation or amortization;

(b) Section 6.04, relating to changes for modern golf course greens;

(d) Section 6.06, relating to changes in depreciation of gas pump canopies; and

(e) Section 6.07, relating to a change in depreciation of utility assets;

(15) Consistent with the Service’s administrative practice, the following sections of the APPENDIX of this revenue procedure are modified to permit a taxpayer to make a change, with the same designated automatic accounting method change number, for more than one asset for the same year of change on a single application:

(a) Section 6.02, relating to changes from a permissible to another permissible method of accounting for depreciation;

(b) Section 6.09, relating to changes in general asset account treatment due to a change in the use of MACRS property;

(c) Section 6.17, relating to changes from an impermissible to permissible method of accounting for depreciation or amortization for disposed depreciable or amortizable property;

(d) Section 6.20, relating to changes for accounting for, or identifying disposed, depreciable repairable and reusable spare parts;

(e) Section 6.21, relating to changes from depreciating land (or nondepreciable land improvement) to not depreciating land (or nondepreciable land improvement); and

(f) Section 6.23, relating to changes for tenant construction allowances;

(16) Section 14.01(1)(b)(viii) of the APPENDIX of this revenue procedure, relating to a change in overall method from the cash method to an accrual method, is modified to provide that this inapplicability subsection does not apply to a taxpayer accounting for inventories under § 1.446–1(c)(2)(i) and accounting for all other items of income and expense on the cash method of accounting, and otherwise permitted to make a change to an overall accrual method of accounting under section 14.01 of the APPENDIX;

(17) Section 19.01(2) of the APPENDIX of this revenue procedure, relating to changes involving timing of incurring liabilities for bonuses, is amplified and mod

2011–4 I.R.B. 356 January 24, 2011

(5) Sections 6.02 and 6.03 of Rev. Proc. 97–27 are modified to provide that a taxpayer not otherwise within the scope of Rev. Proc. 97–27 by reason of section 4.02(2) (under examination), 4.02(5) (consolidated group member) or 4.02(6) (Partnerships and S corporations) that is before an appeals office or federal court with respect to any income tax issue may request a change in method of accounting without audit protection if the method to be changed is an issue under consideration by the appeals office or federal court.

DRAFTING INFORMATION

The principal author of this revenue procedure is Karla M. Meola of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Ms. Meola, at (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).

(h) Section 15.09, relating to changes for sales or dispositions to implement Federal Energy Regulatory Commission or state electric restructuring policy;

(20) The following sections are added to the APPENDIX of this revenue procedure to provide additional changes in method of accounting:

(a) Section 8.04, relating to changes to deduct, under § 179D, amounts paid or incurred for the installation of energy efficient commercial building property;

(b) Section 15.11, relating to changes for advance payments - subsequent change in applicable financial statement (these types of changes were removed from section 15.07 of the APPENDIX); and

(21) Section 21.03(2) of the APPENDIX of this revenue procedure, relating to changes for small taxpayers excepted from the requirement to account for inventories under § 471, is modified to provide that the scope limitations of section 4.02 of this revenue procedure apply to a change in method of accounting made under section 21.03 of the APPENDIX; (22) Section 22.01(7) of the APPENDIX of this revenue procedure, relating to changes from the LIFO inventory method, clarifies that a taxpayer must compute a § 481(a) adjustment when changing from a LIFO method to a non-LIFO method. In addition, this section provides a special rule for calculating that § 481(a) adjustment when the taxpayer is changing to an inventory method that a taxpayer not using

a LIFO method implements on a cut-off basis; and

(23) Section 29.01 of the APPENDIX of this revenue procedure, relating to changes in functional currency, is modified to require taxpayers making a change under this section to attach a statement to the Form 3115.

.02 Significant changes to Rev. Proc. 97–27 include: (1) Section 3.07(1)(c) of Rev. Proc. 97–27 is modified to provide that, if a taxpayer is within the 120-day window period, that 120-day window period ends when a case before Appeals is referred to the examining agent(s) for reconsideration;

(2) Section 3.07(3) of Rev. Proc. 97–27 is clarified to explain that a taxpayer under examination, for purposes of Rev. Proc. 97–27, continues to be under examination while the taxpayer has a refund or credit under review by the Joint Committee on Taxation. This section further explains when such an examination ends for purposes of Rev. Proc. 97–27;

(3) Section 3.08(2) of Rev. Proc. 97–27 is modified to provide the rules for a taxpayer with an issue under consideration before an appeals office when the appeals office submits a refund or credit to the Joint Committee on Taxation;

(4) Section 3.08(3) of Rev. Proc. 97–27 is modified to provide the rules for a taxpayer with an issue under consideration before a federal court when a settlement stipulation is submitted to the Joint Committee on Taxation; and

APPENDIX

CHANGES IN METHODS OF ACCOUNTING TO WHICH THIS REVENUE PROCEDURE APPLIES

deductible, it must be properly allocated to the periods in which it accrues. A Utility using the safe harbor method must comply with all other applicable provisions of Rev. Proc. 2005–35. See Rev. Proc. 2005–35 for the definitions of certain terms for purposes of this change.

(2) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under section 1.01 of this APPENDIX is “91.” See section 6.02(4) of this revenue procedure.