Rev. Proc. 2019-43

LIST OF AUTOMATIC CHANGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112 SECTION 1. GROSS INCOME (§ 61) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112 . 01 Up-front Payments for Network Upgrades received by Utilities SECTION 2. COMMODITY CREDIT LOANS (§ 77). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112 . 01 Treating amounts received as loans SECTION 3. TRADE OR BUSINESS EXPENSES (§ 162). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112 . 01 Advances made by a lawyer on behalf of clients . 02 ISO 9000 Costs . 03 Restaurant or tavern smallwares packages . 04 Timber grower fertilization costs . 05 Materials and supplies . 06 Repair and maintenance costs . 07 Wireline network asset maintenance allowance and units of property methods of accounting under Rev. Proc. 2011-27 . 08 Wireless network asset maintenance allowance and units of property methods of accounting under Rev. Proc. 2011-28 . 09 Method of accounting under Rev. Proc. 2011-43 for taxpayers in the business of transporting, delivering, or selling electricity . 10 Method of accounting under Rev. Proc. 2013-24 for taxpayers in the business of generating steam or electric power. . 11 Cable network asset capitalization methods of accounting under Rev. Proc. 2015-12 SECTION 4. BAD DEBTS (§ 166). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1114 .01 Change from reserve method to specific charge-off method . 02 Conformity election by bank after previous election automatically revoked SECTION 5. INTEREST EXPENSE (§ 163) AND AMORTIZABLE BOND PREMIUM (§ 171). . . . . . . . . . . . . . . . . . . . . . . . 1114 . 01 Revocation of § 171(c) election . 02 Change to comply with § 163(e)(3) SECTION 6. DEPRECIATION OR AMORTIZATION (§ 56(a)(1), 56(g)(4)(A), 167, 168, 197, 280F(a), 1400I,

1400L, or 1400N(d), OR FORMER § 168). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1115 . 01 Impermissible to permissible method of accounting for depreciation or amortization . 02 Permissible to permissible method of accounting for depreciation .03 Sale, lease, or financing transactions . 04 Change in general asset account treatment due to a change in the use of MACRS property . 05 Change in method of accounting for depreciation due to a change in the use of MACRS property .06 Depreciation of qualified non-personal use vans and light trucks . 07 Impermissible to permissible method of accounting for depreciation or amortization for disposed depreciable or amortizable property . 08 Tenant construction allowances . 09 Safe harbor method of accounting for determining the depreciation of certain tangible assets used by wireless telecommunications carriers under Rev. Proc. 2011-22 . 10 Partial dispositions of tangible depreciable assets to which the IRS’s adjustment pertains (§ 168; § 1. 168(i)-8) . 11 Depreciation of leasehold improvements (§§ 167, 168, and 197; § 1. 167(a)-4)

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. 12 Permissible to permissible method of accounting for depreciation of MACRS property (§ 168; §§ 1. 168(i)-1, 1. 168(i)-7, and 1. 168(i)-8) . 13 Disposition of a building or structural component (§ 168; § 1. 168(i)-8) . 14 Dispositions of tangible depreciable assets (other than a building or its structural components) (§ 168; § 1. 168(i)-8) . 15 Dispositions of tangible depreciable assets in a general asset account (§ 168(i)(4); § 1. 168(i)-1) . 16 Summary of certain changes in methods of accounting related to dispositions of MACRS property .17 Depreciation of fiber optic transfer node and fiber optic cable used by a cable system operator (§§ 167 and 168) . 18 Late elections or revocation of elections under § 168(k)(5), (7), and (10) SECTION 7. RESEARCH AND EXPERIMENTAL EXPENDITURES (§ 174). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1139 . 01 Changes to a different method or different amortization period SECTION 8. ELECTIVE EXPENSING PROVISIONS (§ 179D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1140 .01 Deduction for Energy Efficient Commercial Buildings (§ 179D) SECTION 9. COMPUTER SOFTWARE EXPENDITURES (§§ 162, 167, and 197). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1141 . 01 Computer software expenditures SECTION 10. START-UP EXPENDITURES AND ORGANIZATIONAL FEES (§§ 195, 248 AND 709). . . . . . . . . . . . . . . . . . 1141 . 01 Start-up expenditures . 02 Organizational expenditures under § 248 . 03 Organization fees under § 709 SECTION 11. CAPITAL EXPENDITURES (§ 263). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1142 . 01 Package design costs . 02 Line pack gas or cushion gas . 03 Removal costs . 04 Distributor commissions . 05 Intangibles . 06 Rotable spare parts safe harbor method. . 07 Repairable and reusable spare parts . 08 Tangible property . 09 Railroad track structure expenditures . 10 Remodel-refresh safe harbor method SECTION 12. UNIFORM CAPITALIZATION (UNICAP) METHODS (§ 263A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1149 . 01 Certain uniform capitalization (UNICAP) methods used by resellers and reseller-producers . 02 Certain uniform capitalization (UNICAP) methods used by producers and reseller-producers . 03 Impact fees . 04 Change to capitalizing environmental remediation costs under § 263A . 05 Change in allocating environmental remediation costs under § 263A . 06 Safe harbor methods under § 263A for certain dealerships of motor vehicles . 07 Change to not apply § 263A to one or more plants removed from the list of plants that have a preproductive period in excess of 2 years. . 08 Change to a reasonable allocation method described in § 1. 263A-1(f)(4) for self-constructed assets . 09 Real property acquired through foreclosure . 10 Sales-Based Royalties .11 Treatment of Sales-Based Vendor Chargebacks under a Simplified Method . 12 U. S. ratio method . 13 Depletion . 14 Interest capitalization . 15 Change to not apply § 263A to replanting costs for lost or damaged citrus plants pursuant to § 263A(d)(2)(C) . 16 Small business taxpayer exception from requirement to capitalize costs under § 263A .17 Recharacterizing costs under the simplified resale method, simplified production method, or the

modified simplified production method . 18 Revocation of a historic absorption ratio election SECTION 13. LOSSES, EXPENSES AND INTEREST WITH RESPECT TO TRANSACTIONS BETWEEN

RELATED TAXPAYERS (§ 267). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1162 . 01 Change to comply with § 267 SECTION 14. DEFERRED COMPENSATION (§ 404). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1163 . 01 Deferred compensation . 02 Grace period contributions

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SECTION 15. METHODS OF ACCOUNTING (§ 446). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1163 . 01 Change in overall method from the cash method to an accrual method . 02 Multi-year insurance policies for multi-year service warranty contracts . 03 Taxpayers changing to overall cash method . 04 Nonaccrual-experience method . 05 Interest accruals on short-term consumer loans—Rule of 78’s method . 06 Film producer’s treatment of certain creative property costs . 07 Deduction of incentive payments to health care providers . 08 Change by bank for uncollected interest. .09 Change from the cash method to an accrual method for specific items . 10 Multi-year service warranty contracts .11 Overall cash method for specified transportation industry taxpayers . 12 Change to overall cash/hybrid method for certain banks . 13 Change to overall cash method for farmers . 14 Nonshareholder contributions to capital under § 118 . 15 Debt issuance costs . 16 Transfers of interties under the safe harbor described in Notice 2016-36 (§ 118). . 17 Change to or from the net asset value (NAV) method. . 18 Small business taxpayer changing to overall cash method SECTION 16. TAXABLE YEAR OF INCLUSION (§ 451). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1175 . 01 Accrual of interest on nonperforming loans . 02 Advance rentals . 03 State or local income or franchise tax refunds . 04 Capital Cost Reduction Payments . 05 Credit card annual fees . 06 Credit card late fees . 07 Advance payments . 08 Credit card cash advance fees . 09 Retainages .10 Change in applicable financial statements (AFS) for purposes of applying certain revenue

recognition methods of accounting. . 11 Changes in the timing of recognition of income due to the New Standards . 12 Changes in the timing of income recognition under § 451(b) or proposed § 1. 451-3, and changes relating to advance payments under proposed § 1. 451-8 SECTION 17. OBLIGATIONS ISSUED AT DISCOUNT (§ 454). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1183 . 01 Series E, EE or I U. S. savings bonds SECTION 18. PREPAID SUBSCRIPTION INCOME (§ 455). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1183 . 01 Prepaid subscription income SECTION 19. SPECIAL RULES FOR LONG-TERM CONTRACTS (§ 460). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1184 . 01 Small business taxpayer exceptions from requirement to account for certain long-term contracts under § 460 or to capitalize costs under § 263A for certain home construction contracts SECTION 20. TAXABLE YEAR INCURRED (§ 461). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1184 . 01 Timing of incurring liabilities for employee compensation (1) Self-insured employee medical benefits (2) Bonuses (3) Vacation pay, sick pay, and severance pay . 02 Timing of incurring liabilities for real property taxes, personal property taxes, state income taxes, and state franchise taxes . 03 Timing of incurring liabilities under a workers’ compensation act, tort, breach of contract, or violation of law . 04 Timing of incurring certain liabilities for payroll taxes . 05 Cooperative advertising . 06 Timing of incurring certain liabilities for services or insurance . 07 Rebates and allowances . 08 Ratable accrual of real property taxes . 09 California Franchise Taxes . 10 Gift cards issued as a refund for returned goods . 11 Timing of incurring liabilities under the recurring item exception to the economic performance rules

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. 12 Economic performance safe harbor for ratable service contracts SECTION 21. RENT (§ 467). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1189 . 01 Change from an improper method of inclusion of rental income or expense to inclusion in accordance with the rent allocation SECTION 22. INVENTORIES (§ 471). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1189 . 01 Cash discounts . 02 Estimating inventory “shrinkage” . 03 Small taxpayer exception from requirement to account for inventories under § 471 . 04 Qualifying volume-related trade discounts .05 Impermissible methods of identification and valuation of inventories. . 06 Core Alternative Valuation Method . 07 Replacement cost for automobile dealers’ parts inventory . 08 Replacement cost for heavy equipment dealers’ parts inventory . 09 Rotable spare parts . 10 Advance Trade Discount Method .11 Permissible methods of identification and valuation of inventories. .12 Change in the official used vehicle guide utilized in valuing used vehicles . 13 Invoiced advertising association costs for new vehicle retail dealerships . 14 Rolling-average method of accounting for inventories . 15 Sales-Based Vendor Chargebacks . 16 Certain changes to the cost complement of the retail inventory method . 17 Certain changes within the retail inventory method .18 Change from currently deducting inventories to permissible methods of identification and valuation of inventories. . 19 Small business taxpayer exception from requirement to account for inventories under § 471. SECTION 23. LAST-IN, FIRST-OUT (LIFO) INVENTORIES (§ 472). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1195 . 01 Change from the LIFO inventory method . 02 Determining current-year cost under the LIFO inventory method . 03 Alternative LIFO inventory method for retail automobile dealers . 04 Used vehicle alternative LIFO method . 05 Determining the cost of used vehicles purchased or taken as a trade-in . 06 Change to the inventory price index computation (IPIC) method . 07 Changes within the inventory price index computation (IPIC) method . 08 Changes to the Vehicle-Pool Method . 09 Changes within the used vehicle alternative LIFO method . 10 Changes to dollar-value pools of manufacturers SECTION 24. MARK-TO-MARKET ACCOUNTING METHOD (Including § 475). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1200 . 01 Commodities dealers, securities traders, and commodities traders electing to use the mark-to-market method of accounting under § 475(e) or (f) . 02 Taxpayers requesting to change their method of accounting from the mark-to-market method of accounting described in § 475 to a realization method SECTION 25. BANK RESERVES FOR BAD DEBTS (§ 585). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1201 .01 Changing from the § 585 reserve method to the § 166 specific charge-off method SECTION 26. INSURANCE COMPANIES (§§ 807, 816, 832, 833). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1203 . 01 Safe harbor method of accounting for premium acquisition expenses . 02 Certain changes in method of accounting for organizations to which § 833 applies .03 Change in qualification as life/nonlife insurance company under § 816 . 04 Changes in basis of computing reserves under § 807(f) SECTION 27. DISCOUNTED UNPAID LOSSES (§ 846). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1205 . 01 Composite method for discounting unpaid losses SECTION 28. REAL ESTATE MORTGAGE INVESTMENT CONDUIT (REMIC) (§§ 860A-860G) . . . . . . . . . . . . . . . . . . . . 1205 . 01 REMIC Inducement Fees SECTION 29. FUNCTIONAL CURRENCY (§ 985). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1206 . 01 Change in functional currency SECTION 30. ORIGINAL ISSUE DISCOUNT (§§ 1272, 1273). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1206 . 01 De minimis original issue discount (OID) . 02 Proportional method of accounting for OID on a pool of credit card receivables SECTION 31. MARKET DISCOUNT BONDS (§ 1278). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1206

November 25, 2019 1110 Bulletin No. 2019–48

. 01 Revocation of § 1278(b) election SECTION 32. SHORT-TERM OBLIGATIONS (§ 1281). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1207 . 01 Interest income on short obligations . 02 Stated interest on short-term loans of cash method banks EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1208 EFFECT ON OTHER DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1209 PAPERWORK REDUCTION ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1209 SIGNIFICANT CHANGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1210 DRAFTING INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1210 LIST OF AUTOMATIC CHANGES CONTACT LIST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1211

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This revenue procedure provides the List of Automatic Changes to which the automatic change procedures in Rev. Proc. 2015-13, 2015-5 I.R.B. 419, as clarified and modified by Rev. Proc. 2015-33, 2015-24 I.R.B. 1067, and as modified by Rev. Proc. 2017-59, 2017-48 I. R. B. 543, and by section 17. 02(b) and (c) of Rev. Proc. 2016-1, 2016-1 I. R. B. 1, apply. The definitions in section 3 of Rev. Proc. 2015-13 apply to this revenue procedure.

LIST OF AUTOMATIC CHANGES