Rev. Proc. 2025-23, 2025-24 I. R. B. 1476

(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. 2025-23, 2025-24 I. R. B. 1476 (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. 2025-23, 2025-24 I. R. B. 1476 (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 under section 22. 08 of Rev. Proc. 202523, 2025-24 I. R. B. 1476 (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 Auto

matic Changes in Rev. Proc. 2024-23 include:

(1) Section 6. 22, relating to late elections under § 168(j)(8), § 168(l)(3)(D), and § 181(a)(1), is removed because the section is obsolete;

(2) The following paragraphs, relating to the § 481(a) adjustment, are clarified by adding the phrase “for any taxable year in which the election was made” to the second sentence:

(a) Paragraph (2) of section 3. 07, relating to wireline network asset maintenance allowance and units of property methods of accounting under Rev. Proc. 2011-27;

(b) Paragraph (2) of section 3. 08, relating to wireless network asset maintenance allowance and units of property methods of accounting under Rev. Proc. 2011-28; and

(c) Paragraph (3)(a) of section 3. 11, relating to cable network asset capitalization methods of accounting under Rev. Proc. 2015-12;

(3) Section 6. 04, relating to a change in general asset account treatment due to a change in the use of MACRS property, is modified to remove section 6.04(2)(b), providing a temporary waiver of the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13, because the provision is obsolete;

(4) Section 6. 05, relating to changes in method of accounting for depreciation due to a change in the use of MACRS property, is modified to remove section 6.05(2) (b), providing a temporary waiver of the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13, because the provision is obsolete;

(5) Section 6. 13, relating to the disposition of a building or structural component (§ 168; § 1.168(i)-8), is clarified by adding the parenthetical “including the taxable year immediately preceding the year of change” to sections 6. 13(3)(b), (c), (d), and (e), regarding certain covered changes under section 6. 13;

(6) Section 6. 14, relating to dispositions of tangible depreciable assets (other than a building or its structural components) (§ 168; § 1.168(i)-8), is clarified by adding the parenthetical “including the taxable year immediately preceding the year of change” to sections 6. 14(3)(b), (c), (d), and (e), regarding certain covered changes under section 6. 14;

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(7) Section 7. 01, relating to changes in method of accounting for SRE expenditures, is modified as follows. First, to remove section 7. 01(3)(a), relating to changes in method of accounting for SRE expenditures for a year of change that is the taxpayer’s first taxable year beginning after December 31, 2021, because the provision is obsolete. Second, newly redesignated section 7. 01(3)(a) (formerly section 7.01(3)(b)) is modified to remove the references to a year of change later than the first taxable year beginning after December 31, 2021, because the language is obsolete;

(8) Section 12. 14, relating to interest capitalization, is modified to provide under section 12. 14(1)(b) that the change under section 12. 14 does not apply to a taxpayer that wants to change its method of accounting for interest to apply either: (1) current §§ 1. 263A-11(e)(1)(ii) and (iii); or (2) proposed §§ 1. 263A-8(d)(3) and 1. 263A-11(e) and (f) (REG-133850-13), as published on May 15, 2024 (89 FR 42404) and corrected on July 24, 2024 (89 FR 59864);

(9) Section 15. 01, relating to a change in overall method to an accrual method from the cash method or from an accrual method with regard to purchases and sales of inventories and the cash method for all other items, is modified by removing the first sentence of section 15.01(5), disregarding any prior overall accounting method change to the cash method implemented using the provisions of Rev. Proc. 2001-10, as modified by Rev. Proc. 201114, or Rev. Proc. 2002-28, as modified by Rev. Proc. 2011-14, for purposes of the eligibility rule in section 5. 01(e) of Rev. Proc. 2015-13, because the language is obsolete;

(10) Section 15. 08, relating to changes from the cash method to an accrual method for specific items, is modified to add new section 15. 08(1)(b)(ix) to provide that the change under section 15. 08 does not apply to a change in the method of accounting for any foreign income tax as defined in § 1. 901-2(a);

(11) Section 15. 12, relating to farmers changing to the cash method, is clarified to provide that the change under section 15. 12 is only applicable to a taxpayer’s trade or business of farming and not applicable to a non-farming trade or business the taxpayer might be engaged in;

(12) Section 15. 13, relating to nonshareholder contributions to capital under § 118, is modified to require changes under section 15. 13(1)(a)(ii), relating to a regulated public utility under § 118(c) (as in effect on the day before the date of enactment of Public Law 115-97, 131 Stat. 2054 (Dec. 22, 2017)) (“former § 118(c)”) that wants to change its method of accounting to exclude from gross income payments or the fair market value of property received that are contributions in aid of construction under former § 118(c), to be requested under the non-automatic change procedures provided in Rev. Proc. 201513. Specifically, section 15.13(1)(a)(i), relating to a regulated public utility under former § 118(c) that wants to change its method of accounting to include in gross income payments received from customers as connection fees that are not contributions to the capital of the taxpayer under former § 118(c), is removed. Section 15. 13(1)(a)(ii), relating to a regulated public utility under former § 118(c) that wants to change its method of accounting to exclude from gross income payments or the fair market value of property received that are contributions in aid of construction under former § 118(c), is removed. Section 15. 13(2), relating to the inapplicability of the change under section 15. 13(1) (a)(ii), is removed. Section 15. 13(1)(b), relating to a taxpayer that wants to change its method of accounting to include in gross income payments or the fair market value of property received that do not constitute contributions to the capital of the taxpayer within the meaning of § 118 and the regulations thereunder, is modified by removing “(other than the payments received by a public utility described in former § 118(c) that are addressed in section 15. 13(1)(a)(i) of this revenue procedure)” because a change under section 15. 13(1)(a)(i) may now be made under newly redesignated section 15. 13(1) of this revenue procedure;

(13) Section 16. 08, relating to changes in the timing of income recognition under § 451(b) and (c), is modified as follows. First, section 16.08 is modified to remove section 16. 08(5)(a), relating to the temporary waiver of the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13 for certain changes under section 16. 08, because the provision is obsolete. Sec

ond, section 16.08 is modified to remove section 16. 08(4)(a)(iv), relating to special § 481(a) adjustment rules when the temporary eligibility waiver applies, because the provision is obsolete. Third, section 16. 08 is modified to remove sections 16.08(4)(a) (v)(C) and 16. 08(4)(a)(v)(D), providing examples to illustrate the special § 481(a) adjustment rules under section 16. 08(4)(a) (iv), because the examples are obsolete;

(14) Section 19. 01, relating to changes in method of accounting for certain exempt long-term construction contracts from the percentage-of-completion method of accounting to an exempt contract method described in § 1. 460-4(c), or to stop capitalizing costs under § 263A for certain home construction contracts, is modified by removing the references to “proposed § 1. 460-3(b)(1)(ii)” in section 19. 01(1), relating to the inapplicability of the change under section 19. 01, because the references are obsolete;

(15) Section 19. 02, relating to 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 to remove section 19. 02(3)(a), relating to a change in the treatment of SRE expenditures under § 460 for the taxpayer’s first taxable year beginning after December 31, 2021, because the provision is obsolete;

(16) Section 20. 07, relating to changes in method of accounting for liabilities for rebates and allowances to the recurring item exception under § 461(h)(3), is clarified by adding new section 20.07(1)(b) (ii), providing that a change under section 20. 07 does not apply to liabilities arising from reward programs;

(17) The following sections, relating to the inapplicability of the relevant change, are modified to remove the reference to “proposed § 1. 471-1(b)” because this reference is obsolete: (a) Section 22. 01(2), relating to cash dis counts; (b) Section 22. 02(2), relating to estimat ing inventory “shrinkage”; (c) Section 22. 03(2), relating to qualify ing volume-related trade discounts; (d) Section 22. 04(1)(b)(iii), relating to

impermissible methods of identification and valuation of inventories; (e) Section 22. 05(1)(b)(ii), relating to the

core alternative valuation method;

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(f) Section 22. 06(2), relating to replace ment cost for automobile dealers’ parts inventory; (g) Section 22. 07(2), relating to replace ment cost for heavy equipment dealers’ parts inventory; (h) Section 22. 08(2), relating to rotable

spare parts; (i) Section 22. 09(3), relating to the

advanced trade discount method; (j) Section 22. 10(1)(b)(iii), relating to

permissible methods of identification and valuation of inventories; (k) Section 22. 11(2), relating to a change

in the official used vehicle guide utilized in valuing used vehicles; (l) Section 22. 12(2), relating to invoiced

advertising association costs for new vehicle retail dealerships; (m) Section 22. 13(2), relating to the roll ing-average method of accounting for inventories;

(n) Section 22. 14(2), relating to sales based vendor chargebacks; (o) Section 22. 15(2), relating to certain

changes to the cost complement of the retail inventory method; (p) Section 22. 16(2), relating to certain

changes within the retail inventory method; and (q) Section 22. 17(1)(b)(iii), relating to

changes from currently deducting inventories to permissible methods of identification and valuation of inventories; and (18) Section 22. 10, relating to permissible methods of identification and valuation of inventories, is modified to remove section 22. 10(1)(d), because this provision is obsolete.

DRAFTING INFORMATION

The principal author of this revenue procedure is Mia Romano of the Office

of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Ms. Romano at (202) 317-7007 (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, Trusts, & Estates (PT&E); Energy, Credits, and Excise Tax (ECE) or Employee Benefits, Exempt Organizations, and Employment Taxes (EEE).

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LIST OF AUTOMATIC CHANGES CONTACT LIST

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