SECTION 20. RENT (§ 467)

.01 Change from an improper method of inclusion of rental income or expense to inclusion in accordance with the rent al- location .

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

(i) is a party to § 467 rental agreements (within the meaning of § 1.467–1(c)(1) for rental agreements entered into after May 18, 1999, and § 467(d) for all other agreements); and

(ii) wants to change its method of accounting for its fixed rent (as defined in § 1.467–1(d)(2)) to the rent allocation method provided in § 1.467–1(d)(2)(iii).

(b) Inapplicability . This change does not apply to taxpayers required to use the constant rental accrual method described in § 1.467–(3)(a) or the proportional rental accrual method described in § 1.467– (2)(a) for their fixed rent.

(2) Additional requirements . The taxpayer must attach to its Form 3115 a copy of one of its § 467 rental agreements to be

covered by this automatic change (or at least the pages of the agreement relating to the manner in which rent is allocated).

(3) Audit protection limited . Any audit protection under section 8 of Rev. Proc. 2015–13, 2015–5 I.R.B. 419, does not apply to this change for any § 467 rental agreement determined by the Commissioner to be a disqualified leaseback or long-term agreement described in § 1.467–(3)(b).

(4) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 20.01 is “136.” (5) Contact information . For further information regarding a change under this section, contact William Ruane at (202) 317-4718 (not a toll-free number). .02 Reserved .