SECTION 32. SHORT-TERM

OBLIGATIONS (§ 1281).

01 Interest income on short-term obli- gations

(1) Description of change (a) This change applies to a taxpayer that wants to change its method of accounting to comply with § 1281 for interest income on short-term obligations.

(b) Under § 1281, a holder of certain short-term obligations, including a bank as defined in § 581, must include in gross income any accrued interest income on such obligations, regardless of the holder’s overall method of accounting. Section 1281 applies to all types of interest income, including acquisition discount, original issue discount (OID), and stated interest. See S. Rep. No. 99-313, 99 ^th Cong., 2d Sess. 903 (1986), 1986-3 (Vol. 3) C. B. 903.

(c) Section 1283(a)(1) generally defines a short-term obligation as any bond, debenture, note, certificate, or other evidence of indebtedness that matures in one year or less from its issue date.

(d) Under §§ 1281(a) and 1283(c), a holder of a short-term obligation subject to § 1281 must include in gross income an amount equal to the sum of the daily portions of the acquisition discount or OID, whichever is applicable, on the obligation for each day during the taxable year that the obligation is held by the holder. See § 1283(b), as modified by § 1283(c), to determine the daily portions of acquisition discount or OID. In addition, § 1281(a) requires the holder to include in gross income any stated interest that is payable on the short-term obligation (other than stated interest taken into account to determine the amount of the acquisition discount or OID) as it accrues.

(2) Section 481(a) adjustment period . A taxpayer must take the entire § 481(a) adjustment into account in computing taxable income for the year of change.

(3) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 32. 01 is “74. ” (4) Contact information . For further information regarding a change under

this section, contact Jonathan LaPlante at (202) 317-6945 (not a toll-free number)..

02 Stated interest on short-term loans of cash method banks

(1) Description of change . This change applies to a bank that uses the cash receipts and disbursements (cash) method of accounting as its overall accounting method and that wants to change its method of accounting from accruing stated interest on short-term loans made in the ordinary course of business to using the cash method for that interest. For example, see Security State Bank v. Commissioner, 214 F. 3d 1254 (10 ^th Cir. 2000), aff’g 111 T. C. 210 (1998), acq ., 2001-1 C. B. xix; and Secu- rity Bank Minnesota v. Commissioner, 994 F. 2d 432 (8 ^th Cir. 1993), aff’g 98 T. C. 33 (1992), in which the courts held that § 1281 does not apply to short-term loans made by a cash method bank in the ordinary course of its business.

(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) Section 481(a) adjustment period . A taxpayer making this change must take the entire § 481(a) adjustment into account in computing taxable income for the year of change.

(4) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 32. 02 is “75. ” (5) Contact information . For further information regarding a change under this section, contact Jonathan LaPlante at (202) 317-6945 (not a toll-free number).

EFFECTIVE DATE .

01 In general . Except as otherwise provided under this EFFECTIVE DATE section, this revenue procedure is effective for a Form 3115 filed on or after April 30, 2024, for a year of change ending on or after September 30, 2023, that is filed under the automatic change procedures of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, as clarified and modified by Rev. Proc. 201533, 2015-24 I.R.B. 1067, and as modified by Rev. Proc. 2021-34, 2021-35 I. R. B. 337, Rev. Proc. 2021-26, 2021-22 I. R. B. 1163, Rev. Proc. 2017-59, 2017-48 I. R. B.

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543, and section 17. 02(b) and (c) of Rev. Proc. 2016-1, 2016-1 I. R. B. 1..

02 Transition rules . The following transition rules apply:

(1) Limited time period to convert a Form 3115 filed under the non-automatic change procedures in Rev. Proc. 2015- 13 . If, before April 30, 2024, a taxpayer properly filed a Form 3115 under the non-automatic change procedures in Rev. Proc. 2015-13 requesting the Commissioner’s consent for a change in method of accounting described in this revenue procedure, and the Form 3115 is pending with the national office on April 30, 2024, the taxpayer may choose to make the change in method of accounting under the automatic change procedures in Rev. Proc. 2015-13 if the taxpayer is otherwise eligible to use this revenue procedure and the automatic change procedures in Rev. Proc. 2015-13. The taxpayer must notify the national office contact person (if unknown, fax the notification to 855-5749031 or send the notification to the attention of Control Clerk, CC:ITA, Room 4512 at the address specified in section 9. 08(6) of Rev. Proc. 2024-1, 2024-1 I. R. B. 1 (or its successor) for the Form 3115 of the taxpayer’s intent to make the change in method of accounting under the automatic change procedures in Rev. Proc. 2015-13 before the later of (a) May 30, 2024, or (b) the issuance of a letter ruling granting or denying consent for the change. The notification should indicate that the taxpayer chooses to convert the Form 3115 to the automatic change procedures in Rev. Proc. 2015-13. If the taxpayer timely notifies the national office that it chooses to convert the Form 3115 to the automatic change procedures in Rev. Proc. 2015-13, the national office will send a letter to the taxpayer acknowledging its request and will return the user fee submitted with the Form 3115.

A taxpayer converting a Form 3115 to the automatic change procedures in Rev. Proc. 2015-13 for a change in method of accounting described in this revenue procedure must resubmit a Form 3115 that conforms to the automatic change procedures, with a copy of the national office letter sent acknowledging the taxpayer’s request attached, to the IRS in Ogden, UT by the earlier of (a) the 30 ^th calendar day after the date of the national office’s let

ter acknowledging the taxpayer’s request, or (b) the date the taxpayer is required to file the duplicate copy of the Form 3115 under SECTION 6. 03(1)(a)(i)(B) of Rev. Proc. 2015-13. See SECTION 6. 03(3) of Rev. Proc. 2015-13 regarding additional required copies of Form 3115.

For purposes of the eligibility rules in SECTION 5 of Rev. Proc. 2015-13, the duplicate copy of the timely resubmitted Form 3115 will be considered filed as of the date the taxpayer originally filed the converted Form 3115 under the non-automatic change procedures in Rev. Proc. 2015-13. This paragraph (1) does not extend the date the taxpayer must file the original (converted) Form 3115 under SECTION 6. 03(1)(a)(i)(A) of Rev. Proc. 2015-13. A Form 3115 filed under the non-automatic change procedures in Rev. Proc. 2015-13 before April 30, 2024, for a change in method of accounting described in this revenue procedure, will be disregarded for purposes of the prior five-year change rules in SECTIONS 5. 04 and 5. 05 of Rev. Proc. 2015-13 if the taxpayer converts the Form 3115 pursuant to this paragraph (1).

(2) Forms 3115 for changes in methods of accounting that can no longer be filed under the automatic change procedures . Except as provided in subsection . 02(2) (a) of this EFFECTIVE DATE section, the following transition rules apply to the changes in methods of accounting that can no longer be filed under the automatic change procedures in Rev. Proc. 2015-13 because of changes made in this revenue procedure. Examples of such changes in methods of accounting are described in subsection . 01(8) and (9) of the SIGNIFICANT CHANGES section of this revenue procedure.

(a) If before April 30, 2024, a taxpayer properly filed the original, or the duplicate copy, of a Form 3115 under the automatic change procedures in Rev. Proc. 2015-13 for a change in method of accounting that can no longer be filed under the automatic change procedures in Rev. Proc. 2015-13, the taxpayer may continue to make that change in method of accounting under the automatic change procedures in Rev. Proc. 2015-13 for the year of change. The taxpayer is not required to resubmit a duplicate copy of the Form 3115 to the

IRS in Ogden, UT under section 6. 03(1) (a)(i)(B) of Rev. Proc. 2015-13.

(b) If before April 30, 2024, a taxpayer did not properly file the original, or the duplicate copy, of a Form 3115 under the automatic change procedures in Rev. Proc. 2015-13 for a change in method of accounting that can no longer be filed under the automatic change procedures in Rev. Proc. 2015-13, the taxpayer must make that change in method of accounting under the non-automatic change procedures in Rev. Proc. 2015-13. Notwithstanding § 1. 446-1(e)(3)(i), the taxpayer may file a Form 3115 to request the Commissioner’s consent to change the method of accounting under the non-automatic change procedures in Rev. Proc. 2015-13 for the taxpayer’s last taxable year ending before April 30, 2024, on or before the due date of the federal income tax return for that taxable year. Solely for purposes of this paragraph (2)(b), the due date of the taxpayer’s federal income tax return includes extensions, notwithstanding that the taxpayer may not have extended the due date.

(3) Transition rule for taxpayers that properly filed the duplicate copy of Form 3115 before April 30, 2024, for a change that continues to qualify under the auto- matic change procedures.

(a) Option to implement change as described in Rev. Proc. 2023-24 or under this revenue procedure . If, before April 30, 2024, a taxpayer properly filed the duplicate copy of the Form 3115, pursuant to section 6. 03(1)(a)(i)(B) of Rev. Proc. 2015-13, requesting consent to change its method of accounting for a change described in Rev. Proc. 2023-24, 202328 I.R.B. 1207, as modified prior to April 30, 2024, that continues to be eligible for the automatic change procedures in this revenue procedure, but has not filed its timely filed (including extensions) original Federal income tax return for the year of change implementing the change, the taxpayer may choose to implement the change as described in either Rev. Proc. 2023-24 or this revenue procedure, but not both.

(b) Procedures to implement change as described in Rev. Proc. 2023-24. A taxpayer who meets the requirements of paragraph (3)(a) and chooses to implement the change as described in Rev.

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Proc. 2023-24 is not required to resubmit a duplicate copy of the Form 3115 to the IRS in Ogden, UT. However, if requested by the Director, the taxpayer must provide written substantiation that the duplicate copy of the Form 3115 was filed before April 30, 2024, pursuant to section 6. 03(1) (a)(i)(B) of Rev. Proc. 2015-13. Such written substantiation may include proof of mailing or faxing, as appropriate, of the duplicate copy of the Form 3115.

(c) Procedures to implement the change as described in this revenue pro- cedure. A taxpayer who meets the requirements of paragraph (3)(a) and chooses to implement the change as described in this revenue procedure, must resubmit a duplicate copy (with signature) of the Form 3115 to the IRS in Ogden, UT for the year of change under this revenue procedure, pursuant to the requirements of section 6. 03(1)(a)(i)(B) of Rev. Proc. 2015-13. The resubmitted duplicate copy must include the following statement on the top of page 1 of the Form 3115: “FILED UNDER REV. PROC. 2024-23, AS PROVIDED IN SECTION . 02(3)(c) OF THE EFFECTIVE DATE SECTION OF REV. PROC. 2024-23”. For purposes of the eligibility rules in section 5 of Rev. Proc. 2015-13, the duplicate copy of the resubmitted Form 3115 will be considered filed as of the date the taxpayer originally filed the duplicate copy of the Form 3115 requesting the change under Rev. Proc. 2023-24. This paragraph (3)(c) does not extend the date the taxpayer must file either the resubmitted duplicate copy or original Form 3115 under section 6. 03(1) (a) of Rev. Proc. 2015-13. If requested by the Director, the taxpayer must provide written substantiation that the duplicate copy of the Form 3115 requesting the change under Rec. Proc. 2023-24 was filed before April 30, 2024, pursuant to section 6. 03(1)(a)(i)(B) of Rev. Proc. 2015-13. Such written substantiation may include proof of mailing or faxing, as appropriate, of the duplicate copy of the Form 3115.

EFFECT ON OTHER DOCUMENTS

.01 This revenue procedure amplifies and modifies Rev. Proc. 2023-24, 2023-28 I. R. B. 1207. Rev. Proc. 2023-24, as amplified and modified, is superseded in part. The second sentence in the subsection . 01

under the EFFECT ON OTHER DOCUMENTS section of Rev. Proc. 2023-24 remains in effect (that is, the second sentences in sections 14. 01 and 14. 02, and sections 14. 04, 14. 05, 14. 06, and 14. 07 of Rev. Proc. 2011-14, 2011-4 I. R. B. 330, remain in effect). All other sections of Rev. Proc. 2023-24 are superseded. .

02 Rev. Proc. 2011-46, 2011-42 I. R. B. 518, is modified as follows: (1) Section 5.02(3)(a) is modified to remove the first two sentences in the Manner of Making Change section and to substitute the following three new sentences in its place:

(a) In accordance with § 1. 446-1(e)(3) (ii), the requirement under § 1. 446-1(e) (3)(i) to file a Form 3115 is waived and a statement in lieu of a Form 3115 is authorized for this change. Notwithstanding the definition of Form 3115 in section 3.07 of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, the statement in lieu of a Form 3115 that is permitted under this paragraph 5. 02(3)(a) is considered a Form 3115 for purposes of the automatic change procedures in Rev. Proc. 2015-13. However, the requirement to file the duplicate copy, under section 6. 03(1)(a) of Rev. Proc. 2015-13, is waived.

(2) Section 5.03(2)(a) is modified to remove the first two sentences in the Manner of Making Change section and to substitute the following three new sentences in its place:

(a) In accordance with § 1. 446-1(e)(3) (ii), the requirement under § 1. 446-1(e) (3)(i) to file a Form 3115 is waived and a statement in lieu of a Form 3115 is authorized for this change. Notwithstanding the definition of Form 3115 in section 3.07 of Rev. Proc. 2015-13, the statement in lieu of a Form 3115 that is permitted under this paragraph 5. 03(2)(a) is considered a Form 3115 for purposes of the automatic change procedures in Rev. Proc. 2015-13. However, the requirement to file the duplicate copy, under section 6. 03(1)(a) of Rev. Proc. 2015-13, is waived..

03 Rev. Rul. 2004-62, 2004-1 C. B. 1072, is modified to remove the second sentence in the CHANGE IN METHOD OF ACCOUNTING section and to substitute the following new two sentences in its place:

A taxpayer that wants to change its method of accounting to comply with this

revenue ruling must follow the automatic change procedures in Rev. Proc. 201513, 2015-5 I. R. B. 419, (or successor) if the taxpayer is eligible to request such consent under the automatic change procedures therein. The eligibility rules in section 5. 01(1) of Rev. Proc. 2015-13 (or successor) apply to a change in method of accounting described in section 3. 04 of Rev. Proc. 2024-23, 2024-23 I. R. B. 1334 (or successor). .

04 Rev. Rul. 2000-7, 2000-9 C. B. 712, is modified to remove the fourth sentence of the paragraph in the APPLICATION section and to substitute the following new fourth sentence:

A taxpayer that wants to change its method of accounting to conform with the holding in this revenue ruling must follow the automatic change procedures in Rev. Proc. 2015-13, 2015-5 I. R. B. 419, (or successor) if the taxpayer is eligible to request such consent under the automatic change procedures therein, except that the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13 (or successor) does not apply to a change described in section 11. 03 of Rev. Proc. 2024-23, 2024-23 I. R. B. 1334 (or successor). .

05 Rev. Rul. 2000-4, 2000-1 C. B. 331, is modified to remove the second sentence of the paragraph in the APPLICATION section, and to substitute the following two new sentences in that paragraph in its place:

A taxpayer that wants to change its method of accounting to conform with the holding in this revenue ruling must follow the automatic change procedures in Rev. Proc. 2015-13, 2015-5 I. R. B. 419, (or successor) if the taxpayer is eligible to request such consent under the automatic change procedures therein. The eligibility rules in section 5. 01(1) of Rev. Proc. 2015-13 (or successor) apply to a change in method of accounting under section 3. 02 of Rev. Proc. 2024-23, 2024-23 I. R. B. 1334 (or successor). .

06 Rev. Proc. 2007-48, 2007-2 C. B. 110, is modified to remove section 5.06(1) and to substitute it with the following sentence:

The eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, (or successor) does not apply to a change in method of accounting described in section 5. 06 of Rev. Proc. 2007-48, and made

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under section 22. 08 of Rev. Proc. 202423, 2024-23 I. R. B. 1334 (or successor). . 07 Rev. Proc. 2007-16, 2007-1 C. B. 358, is modified as follows: (1) The second sentence in section 4. 01 is modified by substituting “and Rev. Proc. 2015-13, 2015-5 I. R. B. 419” for “and, as applicable, Rev. Proc. 97-27 or Rev. Proc. 2002-9. ” (2) The first sentence in section 4.02 is modified by:

(a) Substituting “the non-automatic change or automatic change procedures of Rev. Proc. 2015-13” for “Rev. Proc. 97-27 or Rev. Proc. 2002-9, as applicable,”; and

(b) Substituting “(as defined in section 3. 19 of Rev. Proc. 2015-13)” for “(as defined in section 5.02(2) of Rev. Proc. 97-27 or section 5. 02 of Rev. Proc. 20029, as applicable)”. (3) Section 4.03 is modified by substituting “Rev. Proc. 2015-13,” for “Rev. Proc. 97-27 or Rev. Proc. 2002-9, as applicable,”..

08 Rev. Proc. 2000-50, 2000-2 C. B. 601, is modified for amounts paid or incurred in taxable years beginning after December 31, 2021, as follows: (1) Section 5. 01 is removed as obsolete. (2) Section 5 is modified to add the fol lowing sentence: Reserved. (3) Section 8 is modified to remove all

references to section 5.

PAPERWORK REDUCTION ACT

The collection of information contained in this revenue procedure has been reviewed and approved by the Office of Management and Budget under OMB control numbers 1545-0074 for individual filers, 1545-0123 for business filers, and 1545-0047 for tax-exempt filers, in accordance with the Paperwork Reduction Act (44 U. S. C. 3507(d)). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. The collections of information in this revenue procedure are in sections 3, 5, 6, 7, 8, 9, 11, 12, 15, 16, 17, 18, 20, 21, 22, 23, 24, 25, 26, 29, 30, 31, and . 02(3) of the EFFECTIVE DATE section. This information is necessary and will be used to determine whether the taxpayer properly changed to a permitted method of

accounting. The collections of information are required for the taxpayer to obtain consent to change its method of accounting.

SIGNIFICANT CHANGES

.01 Significant changes made by this revenue procedure to the List of Automatic Changes in Rev. Proc. 2023-24 include:

(1) The following sections are removed because these sections are obsolete:

(a) Section 7. 01, relating to changes to a different method or different amortization period for research and experimental expenditures;

(b) Section 12. 18, relating to late revocation of elections under § 263A(d)(3); and

(c) Section 20. 13, relating to an accrual method taxpayer that wants to change its method of accounting for one or more inventory costs to treat such costs as incurred in accordance with § 1. 461-1(a) (2) and 1. 461-4(d)(4);

(2) Section 3. 12, relating to a taxpayer that 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) under Rev. Proc. 2023-15, is clarified as follows. First, by adding new paragraph 3. 12(8) to allow a taxpayer changing to the NGSH Method to choose to treat a method change filed for the taxpayer’s second taxable year ending after May 1, 2023, as filed for the taxpayer’s first taxable year ending after May 1, 2023, solely for purposes of the special rule under section 5. 08(3)(a) of Rev. Proc. 2023-15. Second, section 3.12(3)(c)(ii) is clarified to provide that 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)(1), then 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;

(3) Section 6. 01, relating to changing from an impermissible to a permissible method of accounting for depreciation or amortization, is modified to remove the second sentence of section 6. 01(1)(c) (xx), providing that the change in method of accounting under section 6. 21 could be filed under section 6.01 if the duplicate copy was properly filed under section 6.01 before May 11, 2021, because this language is obsolete;

(4) Section 6. 18, relating to changing from an impermissible to a permissible method of accounting for an item of qualified improvement property placed in service after December 31, 2017, is modified by removing paragraph (2), providing a temporary waiver of the eligibility rule in sections 5. 01(1)(d) and 5. 01(1)(f) of Rev. Proc. 2015-13, because this language is obsolete;

(5) Section 6. 19, relating to certain late elections under §§ 168 and 1502 or revocation of certain elections under § 168, is modified to remove all references to Rev. Proc. 2020-25, 2020-19 I. R. B. 785, because these references as used in section 6. 19 are obsolete;

(6) Section 6. 21, relating to depreciation of tangible property under § 168(g) by controlled foreign corporations, is modified by removing the sunset provision in paragraph (3) to permit CFCs to continue to change their depreciation method to the alternative depreciation system (ADS) in § 168(g) under the automatic change procedures of Rev. Proc. 2015-13 (regardless of whether the CFC’s historic depreciation method was permissible or impermissible);

(7) Section 7. 01, relating to a changing the method of accounting for SRE expenditures, is modified and clarified as follows. First, new section 7. 01(2)(c) is added to clarify that section 7. 01(1)(a) of this revenue procedure does not apply to a change to rely on interim guidance provided in sections 8 and 9 of Notice 2023-63, as modified by Notice 2024-12. Second, section 7.01(5)(a) is modified to provide that the eligibility rule in section 5. 01(1)(d) of Rev. Proc. 2015-13 (relating to changes in the final year of a trade or business) does not apply to a change described in section 7. 01(1)(a) of this revenue procedure for the taxpayer’s first or second taxable year beginning after

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December 31, 2021. Third, section 7. 01(5) (b) is clarified to provide that a taxpayer may make a change described in section 7. 01(1)(a) of this revenue procedure for its second taxable year beginning after December 31, 2021, regardless of whether the taxpayer made a change for the same item for its first taxable year beginning after December 31, 2021. Fourth, section 7.01(6) is clarified to provide that a taxpayer does not receive audit protection under section 8. 01 of Rev. Proc. 201513 for a change under section 7. 01(1)(a) of this revenue procedure in the second taxable year beginning after December 31, 2021, with respect to expenditures paid or incurred in the first taxable year beginning after December 31, 2021, if the taxpayer did not change its method of accounting under section 7. 01(1)(a) in an effort to comply with § 174 for the first taxable year beginning after December 31, 2021. Fifth, section 7.01(7) is modified to provide that the designated automatic accounting method change number for all changes under section 7. 01 of this revenue procedure is “265”;

(8) Section 12. 01, relating to certain uniform capitalization (UNICAP) methods used by resellers and reseller-producers, is modified as follows. First, section 12. 01(2)(b), providing a temporary waiver of the eligibility rule in section 5. 01(1) (f) of Rev. Proc. 2015-13, is removed because this language is obsolete. Second, to add section 12. 01(1)(b)(vi) to provide that the change under section 12. 01 does not apply to a taxpayer changing to or from the direct reallocation method or the step-allocation method. Instead, this change must be requested under the non-automatic change procedures provided in Rev. Proc. 2015-13. Third, to add new section 12. 01(1)(b)(vii) to provide that the change under section 12. 01 does not apply to a taxpayer using the direct reallocation method or step-allocation method that wishes to either make an election or revoke an election to use the 90-10 de minimis rule to allocate a mixed service department’s costs to resale activities. Instead, this change must be requested under the non-automatic change procedures provided in Rev. Proc. 2015-13;

(9) Section 12. 02, relating to certain uniform capitalization (UNICAP) methods used by producers and reseller-produc

ers, is modified as follows. First, section 12. 02(4)(b), providing a temporary waiver of the eligibility rule in section 5. 01(1) (f) of Rev. Proc. 2015-13, is removed because this language is obsolete. Second, section 12. 02(1)(b)(vi) is added to provide that the change under section 12. 02 does not apply to a taxpayer changing to or from the direct reallocation method or the step-allocation method. Instead, this change must be requested under the non-automatic change procedures provided in Rev. Proc. 2015-13. Third, new section 12. 02(1)(b)(vii) is added to provide that the change under section 12. 02 does not apply to a taxpayer using the direct reallocation method or step-allocation method that wishes to either make an election or revoke an election to use the 90-10 de minimis rule to allocate a mixed service department’s costs to production or resale activities. Instead, this change must be requested under the non-automatic change procedures provided in Rev. Proc. 2015-13;

(10) Section 12. 07, relating to a change not to apply § 263A to one or more plants removed from the list of plants that have a preproductive period in excess of two years, is modified to remove section 12. 07(2), providing audit protection that applies to blackberry, raspberry, and papaya plants for taxable years that end on or before February 15, 2013, because this language is obsolete;

(11) Section 12. 16, relating to the small taxpayer exception from the requirement to capitalize costs under section 263A, is modified to remove section 12.16(3) (b), providing a temporary waiver of the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13 for certain taxpayers, because this language is obsolete.

(12) Section 15. 01, relating to changes in overall method from the cash receipts and disbursements method (cash method) to an accrual method is modified to remove section 15. 01(5)(b), providing a temporary waiver of the eligibility rule in section 5. 01(1)(e) of Rev. Proc. 201513 for changes to comply with §451(b), because this language is obsolete;

(13) Section 15. 17, relating to small business taxpayers changing the overall method of accounting to the cash method or to a method of accounting in which the small business taxpayer uses an

accrual method for purchases and sales of inventories and uses the cash method of accounting for computing all other items of income and expense, is modified to remove section 15. 17(6)(b), providing a temporary waiver of the eligibility rule in section 5. 01(1)(e) of Rev. Proc. 2015-13 for certain taxpayers, because this language is obsolete;

(14) Section 16. 08, relating to changes in the timing of income recognition under § 451(b) and (c), is modified and clarified as follows. First, section 16.08(3) (a) is added, to clarify that a change under section 16. 02 does not apply to a change to comply with the all events test in § 1. 451-1(a). Instead, this change must be requested under the non-automatic change procedures provided in Rev. Proc. 2015-13. Second, section 16. 08 is modified to remove section 16.08(4)(a), relating to short Form 3115, because it is obsolete. Third, section 16.08 is modified to remove section 16. 08(4)(c), relating to streamlined method change procedures for certain taxpayers, because it is obsolete. Fourth, section 16.08 is modified to remove section 16. 08(5)(c), relating to certain changes with a § 481(a) adjustment of zero being disregarded for eligibility rules, because it is obsolete. Fifth, section 16.08 is modified to remove section 16. 08(6)(a), relating to audit protection for taxpayers using the streamlined method change procedures, because it is obsolete. Sixth, section 16.08 is modified to remove section 16. 08(6)(b)(i), relating to audit protection for taxpayers under examination, because it is obsolete. Seventh, section 16. 08(7)(b), which provides an ordering rule for concurrent cost-offset related inventory method changes and changes to apply a cost offset method, is modified to require a taxpayer making a cost-offset related inventory method change(s) and a change to the AFS cost offset method or advance payment cost offset method in the same year of change to make the cost-offset related inventory method change(s) first. Sections 16.08(2) (a)(i)(E), 16. 08(2)(a)(ii)(F) and 16. 08(2) (b)(v), which provide corresponding changes to a cost offset method as a result of cost-offset related inventory method changes, have been modified to apply only to taxpayers presently using a cost offset method, consistent with the new ordering

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rule. Eighth, the ordering rule for concurrent cost-offset related inventory method changes and corresponding changes to a cost offset method in section 16. 08(7) (b) has been moved to a new section 16. 08(7)(c); section 16. 08(7)(c) is also clarified to provide that a taxpayer may file a single Form 3115 that includes both the cost-offset related inventory method change and the corresponding cost offset change. Ninth, section 16. 08(7)(d) is added to provide examples to illustrate the operation of the ordering rules which require a taxpayer to make a cost-offset related inventory method change before a change to apply a cost offset method and a cost-offset related inventory method change before a corresponding change to a cost offset method;

(15) Section 19. 02, regarding changes in method of accounting under § 460 to rely on the interim guidance provided in section 8 of Notice 2023-63, 2023-39 I.R.B. 919, is modified as follows. Section 19.02(4) is modified to provide that the eligibility rule in section 5. 01(1)(d) of Rev. Proc. 2015-13 (relating to changes in the final year of a trade or business) does not apply to a change described in section 19. 02(1) of this revenue procedure for the taxpayer’s first or second taxable year beginning after December 31, 2021;

(16) Section 22. 04, relating to a taxpayer that wants to change from an impermissible method of identifying or valuing inventories to a permissible method of identifying or valuing inventories, is modified to remove section 22.04(1)(d), providing a temporary waiver of the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13 for certain changes related

to a cost offset method, because this language is obsolete;

(17) Section 22. 10, relating to changes to permissible methods of identification and valuation of inventories, is modified by removing section 22. 10(1)(d), providing a temporary waiver of the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13 for certain changes related to a cost offset method, because this language is obsolete;

(18) Section 22. 17, relating to changes from currently deducting inventories to permissible methods of identification and valuation of inventories, is modified by removing section 22. 10(1)(d), providing a temporary waiver of the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13 for certain changes related to a cost offset method, because this language is obsolete;

(19) Section 22. 18, relating to a change by a small business taxpayer to certain § 471 methods of accounting, is modified as follows. First, section 22.18(5)(b) and (c), providing a temporary waiver of the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13 for certain changes, is removed because the language is obsolete. Second, section 22. 18 (6)(b), providing streamlined method change procedures for certain taxpayers, is removed because this language is obsolete;

(20) Section 23. 01, relating to certain changes from the LIFO inventory method, is modified as follows. First, section 23. 01(2)(b), providing a temporary waiver of the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13 for certain changes, is removed because the language is obsolete. Second, section 23. 01(8), denying ruling protection in certain cases, is

removed because this language is obsolete; and

(21) Section 24. 02, relating to taxpayers requesting to change their method of accounting from the mark-to-market method of accounting described in § 475 to a realization method, is clarified to provide that a dealer in securities making such change under the non-automatic change procedures in Rev. Proc. 2015-13 must also file a Notification Statement that satisfies all applicable requirements of section 24. 02(7) of this revenue procedure, including the timely filing requirements.

DRAFTING INFORMATION

The principal author of this revenue procedure is Bruce Chang of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Mr. Chang at (202) 317-4870 (not a tollfree number).

For further information regarding a specific change in method of accounting in this revenue procedure, contact the individual listed in the “Contact Person(s)” section located at the end of each section of the revenue procedure (numbers are not toll-free) or see the CONTACT LIST at the end of this revenue procedure. The contact person is with one of the following Offices of Associate Chief Counsel: Corporate (CORP), Financial Institutions and Products (FI&P), Income Tax & Accounting (IT&A), International (INTL), Passthroughs and Special Industries (P&SI), or Employee Benefits, Exempt Organizations, and Employment Taxes (EEE).

June 3, 2024 1454 Bulletin No. 2024–23

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