SECTION 4. BAD DEBTS (§ 166)

.01 Change from reserve method to specific charge-off method .

(1) Description of change . This change applies to a taxpayer (other than a bank as defined in § 585(a)(2)) that wants to change its method of accounting for bad debts from a reserve method (or other improper method) to a specific charge-off method that complies with § 166. For procedures applicable to banks, see § 585(c) and the regulations thereunder and section 25 of this revenue procedure. (2) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 4.01 is “5.” (3) Contact information . For further information regarding a change under this section, contact Renay France at (202) 317-7003 (not a toll-free number). .02 Conformity election by bank after previous election automatically revoked .

(1) Description of change . This change applies to a bank that wants to change its method of accounting for bad debts by making the conformity election under § 1.166‑2(d)(3)(iii)(C)( 3 ).

Bulletin No. 2023–28 1217 July 10, 2023

provided in section 7.03 of Rev. Proc. 2015-13 will be accelerated for a U.S. person with a remaining balance of a § 481(a) adjustment that arose by reason of a change in method of accounting described in this section 5.02 if a debt instrument subject to the change is paid off, retired, or significantly modified within the meaning of § 1.1001-3 prior to the end of the § 481(a) adjustment period. The portion of the remaining § 481(a) adjustment attributable to the debt instrument must be taken into account in the taxable year the debt instrument is paid off, retired, or significantly modified within the meaning of § 1.1001-3.

(3) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 5.02 is “212.” (4) Contact information . For further information regarding a change under this section, contact Anisa Afshar at (202) 317-6934 (not a toll-free number).