SECTION 1. GROSS INCOME (§ 61) .

01 Up-front Payments for Network Upgrades received by Utilities

(1) Description of change . This change applies to a Utility that wants to change its method of accounting for Up-front Payments to the safe harbor method described in Rev. Proc. 2005-35, 2005-2 C. B. 76. In general, this change applies to a Utility that receives an Up-front Payment from a Generator to finance Network Upgrades to the Utility’s Transmission System. For federal income tax purposes, if an Up-front Payment is made pursuant to an Interconnection Agreement that satisfies all of the conditions of section 5.02 of Rev. Proc. 2005-35, a Utility may treat that Up-front Payment as not being taxable income under § 61 when received (the safe harbor method). In addition, a Utility that uses the safe harbor method is not entitled to any deduction for its reimbursements of the Up-front Payment. To the extent that Federal Energy Regulatory Commission (FERC) interest is 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 this section

1. 01 is “91. ” (3) Contact information . For further information regarding a change under this

section, contact William E . Blanchard at (202) 317-3900 (not a toll-free number) .

SECTION 2 . COMMODITY CREDIT LOANS (§ 77)

.01 Treating amounts received as loans . (1) Description of change . This change applies to a taxpayer that wants to change its method of accounting for loans received from the Commodity Credit Corporation from including the loan amount in gross income for the taxable year in which each loan is received to treating each loan amount as a loan .

(2) Certain eligibility rule inapplica- ble . The eligibility rule in section 5 .01(1) (f) of Rev . Proc . 2015-13, 2015-5 I .R .B . 419, does not apply to this change . (3) Manner of making change . This change is made on a cut-off basis and applies only to loans received from the Commodity Credit Corporation on or after the beginning of the year of change . Accordingly, a § 481(a) adjustment is neither permitted nor required .

(4) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 2 .01 is “1 .” (5) Contact information . For further information regarding a change under this section, contact Michael Finn at (202) 317-4718 (not a toll-free number) .

SECTION 3 . TRADE OR BUSINESS EXPENSES (§ 162)

.01 Advances made by a lawyer on behalf of clients .

(1) Description of change . This change applies to a lawyer who advances money to pay for costs of litigation or for other expenses on behalf of clients, and who wants to change the method of accounting for such advances from treating them as deductible business expenses to treating them as loans to clients . This change applies to cases handled either on a non-contingent or a contingent fee basis . See Pelton & Gun- ther, P.C. v. Commissioner, T .C . Memo . 1999-339 (non-contingent fee); Canelo v. Commissioner, 53 T .C . 217 (1969), aff’d per curiam, 447 F .2d 484 (9 ^th Cir . 1971) (contingent fee) .

(2) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 3 .01 is “2 .” (3) Contact information . For further information regarding a change under this section, contact Alicia Lee-Won at (202) 317-7003 (not a toll-free number) . .02 ISO 9000 costs . (1) Description of change . This change applies to a taxpayer that wants to change its method of accounting for costs incurred to obtain, maintain, and renew ISO 9000 certification to conform with Rev. Rul. 2000-4, 2000-1 C.B. 331, as modified by this revenue procedure .

(2) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 3 .02 is “3 .” (3) Contact information . For further information regarding a change under this section, contact Alicia Lee-Won at (202) 317-7003 (not a toll-free number) . .03 Restaurant or tavern smallwares packages .

(1) Description of change . This change applies to a taxpayer engaged in the trade or business of operating a restaurant or tavern (within the meaning of section 4 .01 of Rev . Proc . 2002-12, 2002-1 C .B . 374) that wants to change its method of accounting for the costs of smallwares to the smallwares method described in Rev . Proc. 2002-12, as modified by this revenue procedure .

(2) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 3 .03 is “4 .” (3) Contact information . For further information regarding a change under this section, contact Renay France at (202) 317-7003 (not a toll-free number) . .04 Timber grower fertilization costs . (1) Description of change . This change applies to a timber grower that wants to change its method of accounting to treat post-establishment fertilization costs of an established timber stand as ordinary and necessary business expenses deductible under § 162 . See Rev . Rul . 2004-62, 2004-1 C.B. 1072, as modified by this revenue procedure .

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(2) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 3. 04 is “86. ” (3) Contact information . For further information regarding a change under this section, contact Maria Castillo Valle at (202) 317-7003 (not a toll-free number)..

05 Materials and supplies . See section 11. 08 of this revenue procedure. . 06 Repair and maintenance costs . See section 11. 08 of this revenue procedure..

07 Wireline network asset mainte- nance allowance and units of property methods of accounting under Rev. Proc. 2011-27 (1) Description of change . This change applies to a wireline telecommunications carrier that is within the scope of Rev. Proc. 2011-27, 2011-18 I. R. B. 740, and wants to change its treatment of wireline network asset expenditures to use either (a) the wireline network asset maintenance allowance method of accounting, or (b) all or some of the units of property described in Rev. Proc. 2011-27.

(2) Section 481(a) adjustment . In general, a change to the wireline network asset maintenance allowance method of accounting or to use all or some of the units of property specified in Rev. Proc. 201127 requires an adjustment under § 481(a). The § 481(a) adjustment shall not include any amount attributable to property for which the taxpayer elected to apply the repair allowance under § 1. 167(a)-11(d) (2).

(3) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 3. 07 is “158. ” (4) Contact information . For further information regarding a change under this section, contact Ian Heminsley at (202) 317-5100 (not a toll-free number).. 08 Wireless network asset mainte- nance allowance and units of property methods of accounting under Rev. Proc. 2011-28 (1) Description of change . This change applies to a wireless telecommunications carrier that is within the scope of Rev. Proc. 2011-28, 2011-18 I. R. B. 743, and wants to change its treatment of wireless network asset expenditures to use either

(a) the wireless network asset maintenance allowance method of accounting, or (b) all or some of the units of property described in Rev. Proc. 2011-28.

(2) Section 481(a) adjustment . In general, a change to the wireless network asset maintenance allowance method of accounting or to use all or some of the units of property specified in Rev. Proc. 201128 requires an adjustment under § 481(a). The § 481(a) adjustment does not include any amount attributable to property for which the taxpayer elected to apply the repair allowance under § 1. 167(a)-11(d) (2).

(3) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 3. 08 is “159. ” (4) Contact information . For further information regarding a change under this section, contact Samuel Terhaar at (202) 317-5100 (not a toll-free number).. 09 Method of accounting under Rev. Proc. 2011-43 for taxpayers in the busi- ness of transporting, delivering, or selling electricity

(1) Description of change . This change applies to a taxpayer that is within the scope of Rev. Proc. 2011-43, 2011-37 I. R. B. 326, and wants to change its treatment of transmission and distribution property expenditures to use the method of accounting described in Rev. Proc. 2011-43. (2) Section 481(a) adjustment . A taxpayer must take the entire net § 481(a) adjustment into account (whether positive or negative) in computing taxable income for the year of change. The § 481(a) adjustment does not include any amount attributable to property for which the taxpayer elected to apply the repair allowance under § 1. 167(a)-11(d)(2) for any taxable year in which the election was made. For guidance regarding permissible § 481(a) calculation methodologies, see section 7. 02 and Appendix A of Rev. Proc. 2011-43. (3) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 3. 09 is “160. ” (4) Contact information . For further information regarding a change under this

section, contact Nathaniel Kupferman at (202) 317-5100 (not a toll-free number)..

10 Method of accounting under Rev. Proc. 2013-24 for taxpayers in the business of generating steam or electric power .

(1) Description of change . This change applies to a taxpayer that is within the scope of Rev. Proc. 2013-24, 2013-22 I. R. B. 1142, and wants to change its treatment of generation property expenditures to use all or some of the unit of property definitions and the corresponding major component definitions described in Rev. Proc. 2013-24.

(2) Section 481(a) adjustment . (a) A taxpayer must take the entire net § 481(a) adjustment into account (whether positive or negative) in computing taxable income for the year of change. For guidance regarding the use of extrapolation in computing a § 481(a) adjustment, see sections 6. 02 and Appendix B of Rev. Proc. 2013-24. (b) A taxpayer changing to this method of accounting must not include in the § 481(a) adjustment any amount attributable to property for which the taxpayer elected to apply the repair allowance under § 1. 167(a)–11(d)(2) for any taxable year in which the repair allowance election was made.

(3) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 3. 10 is “182. ” (4) Contact information . For further information regarding a change under this section, contact Morgan Lawrence at (202) 317-7011 (not a toll-free number)..

11 Cable network asset capitalization methods of accounting under Rev. Proc. 2015-12 (1) Description of change . This change applies to a cable system operator that is within the scope of Rev. Proc. 2015-12, 2015-2 I. R. B. 266, and wants to make one or more of the following changes in method of accounting:

(a) Change its treatment of cable network asset expenditures to the cable network asset maintenance allowance method of accounting provided in section 5 of Rev. Proc. 2015-12; (b) Change to use any of the unit of property definitions provided in section 6 of Rev. Proc. 2015-12;

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section 6. 12(3)(b) and/or section 6. 15 of this revenue procedure for linear property and/or non-linear property for its first, second, or third taxable year ending after May 1, 2023, on a single Form 3115 for the same asset for the same year of change in accordance with section 3. 12(6)(b) of this revenue procedure, the eligibility rules in section 5. 01(1)(d) and (f) of Rev. Proc. 2015-13 do not apply to the taxpayer for these changes.

(ii) If a taxpayer makes both a change under this section 3. 12 and a change under section 11. 08, 12. 01, 12. 02, 12. 08, and/or 12. 12 of this revenue procedure, as applicable, for its linear property or non-linear property costs in its first, second, or third taxable year ending after May 1, 2023, on a single Form 3115 for the same year of change in accordance with section 3. 12(6) (c) of this revenue procedure, the eligibility rules in section 5. 01(1)(d) and (f) of Rev. Proc. 2015-13 do not apply to the taxpayer for these changes.

(3) Manner of making change (a) Late general asset account election (i) The late general asset account election change described in section 5. 08(2) of Rev. Proc. 2023-15 is made using a modified cut-off method under which the unadjusted depreciable basis and the depreciation reserve of the asset as of the beginning of the year of change are accounted for using the proposed method of accounting. The late general asset account election change requires each general asset account to include a beginning balance for both the unadjusted depreciable basis and the depreciation reserve. The beginning balance for the unadjusted depreciable basis of each general asset account is equal to the sum of the unadjusted depreciable bases as of the beginning of the year of change for all assets included in that general asset account. The beginning balance of the depreciation reserve of each general asset account is equal to the sum of the greater of the depreciation allowed or allowable as of the beginning of the year of change for all assets included in that general asset account.

(ii) For the late general asset account election change described in section 5. 08(2) of Rev. Proc. 2023-15, the taxpayer must attach to its Form 3115 a statement providing that the taxpayer agrees to the following additional terms and conditions:

(c) Change to use the specific identification method for installations and customer drop costs described in section 7 .01(1) of Rev . Proc . 2015-12; (d) Change to use the safe harbor allocation method for installations and customer drop costs described in section 7 .01(2) of Rev . Proc . 2015-12; or (e) Change to deduct the labor costs associated with installing customer premises equipment under section 7 .02 of Rev . Proc . 2015-12 .

(2) Concurrent automatic change . A taxpayer that wants to make one or more changes in method of accounting pursuant to this section 3 .11 and a change to a UNICAP method under section 12 of this revenue procedure for the same year of change should file a single Form 3115 that includes all of these changes and must enter the designated automatic accounting method change numbers for all of these changes on the appropriate line on the Form 3115 . See section 6 .03(1)(b) of Rev . Proc . 2015-13 for information on making concurrent changes .

(3) Section 481(a) adjustment . (a) In general, a change to one or more of the changes in method of accounting described in section 3 .11(1) of this revenue procedure requires an adjustment under § 481(a) . The § 481(a) adjustment shall not include any amount attributable to property for which the taxpayer elected to apply the repair allowance under § 1 .167(a)-11(d)(2) .

(b) Itemized listing on Form 3115 . The taxpayer must include on Form 3115 (Rev . December 2022), Part IV, line 26, the total § 481(a) adjustment for all changes in methods of accounting being made . If the taxpayer is making more than one change in method of accounting under Rev . Proc . 2015-12, the taxpayer must include on an attachment to Form 3115:

(i) the information required by Part IV, line 26 for each change in method of accounting (including the amount of the § 481(a) adjustment for each change in method of accounting, which includes the portion of the § 481(a) adjustment attributable to UNICAP);

(ii) the information required by Part II, line 14 of Form 3115 that is associated with each change; and

(iii) the citation to the paragraph of Rev . Proc . 2015-12 that provides for each proposed method of accounting .

(4) Designated automatic account- ing method change number . The designated automatic accounting method change number for a change to a method of accounting provided in section 5 or 6 of Rev . Proc . 2015-12 is “208 .” The designated automatic accounting method change number for a change to a method of accounting provided in section 7 of Rev . Proc . 2015-12 is “209 .”

(5) Contact information . For further information regarding a change under this section, contact Elizabeth Boone at (202) 317-5100 (not a toll-free number) . .12 Natural gas transmission and dis- tribution property method of accounting under Rev. Proc. 2023-15 .

(1) Description of change . (a) Applicability . This change applies to a taxpayer that is within the scope of Rev . Proc . 2023-15 and wants to change its treatment of natural gas transmission and distribution property costs to use the natural gas transmission and distribution property safe harbor method of accounting (NGSH Method) described in Rev . Proc. 2023-15. Specifically, this change applies to a taxpayer that wants to change to “the safe harbor method for linear property” or “the safe harbor method for non-linear property” and other applicable rules in accordance with Rev . Proc . 2023-15, including the making of a late general asset account election as required under section 5 .08(2) of Rev . Proc . 202315 . This change also applies to a taxpayer that previously changed to the safe harbor method for linear property and wants to change to the safe harbor method for non-linear property for a subsequent taxable year .

(b) Inapplicability . This change does not apply to the making of a late general asset account election other than in accordance with section 5 .08(2) of Rev . Proc . 2023-15 . (2) Certain eligibility rules temporarily inapplicable .

(a) In general . The eligibility rules in section 5 .01(1)(d) and (f) of Rev . Proc . 2015-13 do not apply to a taxpayer that changes to the NGSH Method provided in Rev. Proc. 2015-13 for its first, second, or third taxable year ending after May 1, 2023 .

(b) Concurrent automatic change . (i) If a taxpayer makes both a change under this section 3 .12 and a change under

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(A) The taxpayer consents to, and agrees to apply, all the provisions of § 1. 168(i)-1 to the assets that are subject to the election specified in section 5.08(2) of Rev. Proc. 2023-15; and

(B) Except as provided in § 1. 168(i)-1(c)(1)(ii)(A), (e)(3), (g), or (h), the election made by the taxpayer under section 5. 08(2) of Rev. Proc. 2023-15 is irrevocable and will be binding on the taxpayer for computing taxable income for the year of change and for all subsequent taxable years with respect to the assets that are subject to this election.

(b) Cut-off basis for certain changes . Except for changes to make a late general asset account election described in section 3. 12(3)(a) of this revenue procedure, a change to the NGSH Method described in Rev. Proc. 2023-15 is made on a cut-off basis and applies only to natural gas transmission and distribution property costs paid or incurred beginning in or after the year of change if (i) Sections 5. 08(2)(a)(ii) and 6. 04 of Rev. Proc. 2023-15 apply (the taxpayer changes to the NGSH Method described in Rev. Proc. 2023-15 for the first, second, or third taxable year ending after May 1, 2023, on a cut-off basis); or (ii) Section 5. 08(2)(a)(iii) of Rev. Proc. 2023-15 applies (the taxpayer changes to the NGSH Method described in Rev. Proc. 2023-15 for the fourth taxable year ending after May 1, 2023, or for any subsequent taxable year).

(c) Public Utility Property . If the taxpayer’s change to the NGSH Method described in Rev. Proc. 2023-15 applies to any asset that is public utility property within the meaning of § 168(i)(10), the taxpayer must attach a statement to its Form 3115 agreeing to the following additional terms and conditions:

(i) A normalization method of accounting (within the meaning of § 168(i)(9)) will be used for the public utility property subject to the Form 3115;

(ii) As of the beginning of the year of change, the taxpayer will adjust its deferred tax reserve account or similar account in the taxpayer’s regulatory books of account by the amount of the deferral of federal income tax liability associated with the § 481(a) adjustment applicable to the public utility property subject to the Form 3115 if such amount is no longer

being normalized for regulatory purposes by the taxpayer; and

(iii) Within 30 calendar days of filing the federal income tax return for the year of change, the taxpayer will provide a copy of the completed Form 3115 to any regulatory body having jurisdiction over the public utility property subject to the Form 3115.

(4) Section 481(a) adjustment (a) In general . Except as provided in section 3. 12(3)(b) of this revenue procedure, a taxpayer changing its methods of accounting under this section 3. 12 must take the entire net § 481(a) adjustment into account, whether positive or negative, in computing taxable income for the year of change in the manner provided in section 7. 03 of Rev. Proc. 2015-13. The entire net § 481(a) adjustment includes all aspects of the NGSH Method described in Rev. Proc. 2023-15, including a change to the methods of accounting permitted under § 1. 168(i)-1 pursuant to section 5. 08(2) of Rev. Proc. 2023-15. However, a § 481(a) adjustment is neither required nor permitted for the late general asset account election described in section 5. 08(2) of Rev. Proc. 2023-15. Further, a § 481(a) adjustment is neither required nor permitted if the taxpayer chooses to change to the NGSH Method on a cutoff basis under section 6. 04 of Rev. Proc. 2023-15 or if the taxpayer changes to this method during the time described in section 5. 08(2)(a)(iii) of Rev. Proc. 2023-15.

(b) Repair allowance property . A taxpayer changing its method of accounting under this section 3. 12 must not include in the § 481(a) adjustment any amount attributable to property for which the taxpayer elected to apply the repair allowance under § 1. 167(a)-11(d)(2) for any taxable year in which the repair allowance election was made.

(c) Property subject to the election to capitalize repair and maintenance costs . A taxpayer changing its method of accounting under this section 3. 12 must not include in the § 481(a) adjustment any amount attributable to property for which the taxpayer elected to capitalize repair and maintenance costs under § 1. 263(a)-3(n) for any taxable year in which this election was made.

(d) Statistical sampling . A taxpayer changing to the NGSH Method under this

section 3. 12 may use statistical sampling in determining the § 481(a) adjustment amount attributable to any single taxable year by following the guidance provided in Rev. Proc. 2011-42, 2011-37 I. R. B. 318.

(e) Extrapolation . A taxpayer changing to the NGSH Method under this section 3. 12 may use the extrapolation methodology provided in Appendix B to Rev. Proc. 2023-15 (Appendix B) in determining the § 481(a) adjustment amount if the taxpayer is within the scope of section 1. 02 of Appendix B. Extrapolation methodologies not permitted in Appendix B are not permitted under the NGSH Method.

(5) No audit protection for certain tax- payers . If a taxpayer chooses to change to the NGSH Method described in Rev. Proc. 2023-15 on a cut-off basis as permitted under section 6. 04 of Rev. Proc. 2023-15 or is required to change on a cutoff basis under section 5. 08(3)(b)(i) of Rev. Proc. 2023-15, the taxpayer does not receive audit protection under section 8. 01 of Rev. Proc. 2015-13 in connection with this change.

(6) Concurrent automatic changes (a) A taxpayer making changes under this section 3. 12 for more than one asset for the same year of change must file a single Form 3115 for all such assets. The single Form 3115 must provide a single net § 481(a) adjustment for all such changes.

(b) A taxpayer making changes under this section 3. 12 and changes under section 6. 12(3)(b) and/or section 6. 15 of this revenue procedure for linear property or non-linear property costs for the same year of change must file a single Form 3115 for all changes and must enter the designated automatic accounting method change numbers for all changes on the appropriate line on the Form 3115. See section 6. 03(1)(b) of Rev. Proc. 2015-13 for information on making concurrent changes.

(c) A taxpayer making changes under this section 3. 12 and also making a coordinating change to its linear property or non-linear property costs under section 11. 08, 12. 01, 12. 02, 12. 08, and/or 12. 12 of this revenue procedure, as applicable, must file a single Form 3115 for the same year of change for all these changes, provided that the taxpayer is not prohibited from filing an automatic change under the eligibility rules under section 5 of

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