SECTION 1. PURPOSE

This revenue procedure provides a safe harbor method of accounting that taxpayers may use to determine whether certain expenditures to maintain, repair, replace, or improve natural gas transmission and distribution property must be capitalized as improvements under § 263(a) of the Internal Revenue Code (Code) or as the costs of property produced by the taxpayer for use in its trade or business under § 263A, or are allowable as deductions under § 162. ¹ This revenue procedure also provides procedures for taxpayers to obtain automatic consent to change their method of accounting to the safe harbor method of accounting permitted by this revenue procedure.