SECTION 6. DEPRECIATION OR

AMORTIZATION (§§ 56(a)(1), 167, 168, 197, 280F(a), or 1502, OR FORMER §§ 56(g)(4)(A), 168, 1400I, 1400L, or 1400N(d)).

01 Impermissible to permissible method of accounting for depreciation or amortization

(1) Description of change (a) Applicability . This change applies to a taxpayer that wants to change from an impermissible to a permissible method of accounting for depreciation or amortization (depreciation) for any item of depreciable or amortizable property under the taxpayer’s present or proposed method of accounting:

(i) for which the taxpayer used the impermissible method of accounting in at least two taxable years immediately preceding the year of change (but see section 6. 01(1)(b) of this revenue procedure for property placed in service in the taxable year immediately preceding the year of change);

(ii) for which the taxpayer is making a change in method of accounting under § 1. 446-1(e)(2)(ii)( d );

(iii) for which depreciation is determined under § 56(a)(1), § 56(g)(4)(A) (as in effect on the day before the date of enactment of Public Law 115-97, 131 Stat. 2054 (Dec. 22, 2017), commonly referred to as the Tax Cuts and Jobs Act (TCJA)), § 167, § 168, § 197, § 1400I, or § 1400L(c), under § 168 prior to its

amendment in 1986 (former § 168), or under any additional first year depreciation deduction provision of the Code (for example, § 168(k), § 168(l), § 1400L(b), or § 1400N(d)); and

(iv) that is owned by the taxpayer at the beginning of the year of change (but see section 6. 07 of this revenue procedure for property disposed of before the year of change).

(b) Taxpayer has not adopted a method of accounting for the item of property . If a taxpayer does not satisfy section 6. 01(1)(a)(i) of this revenue procedure for an item of depreciable or amortizable property because this item of property is placed in service by the taxpayer in the taxable year immediately preceding the year of change (“1-year depreciable property”), the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for the 1-year depreciable property by filing a Form 3115 for this change, provided the § 481(a) adjustment reported on the Form 3115 includes the amount of any adjustment that is attributable to all property (including the 1-year depreciable property) subject to the Form 3115. Alternatively, the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for a 1-year depreciable property by filing an amended federal income tax return, or an administrative adjustment request under § 6227 (AAR), as applicable, for the property’s placed-in-service year prior to the date the taxpayer files its federal income tax return for the taxable year succeeding the placed-in-service year.

(c) Inapplicability . This change does not apply to:

(i) any property to which § 1016(a)(3) (regarding property held by a tax-exempt organization) applies;

(ii) a taxpayer that is required under § 263A and the regulations thereunder to capitalize the costs with respect to which the taxpayer wants to change its method of accounting under this section 6. 01 if the taxpayer is not capitalizing these costs, unless the taxpayer concurrently changes its method to capitalize these costs in conjunction with a change to a UNICAP method under section 12. 01, 12. 02, 12. 08,

or 12. 12 of this revenue procedure (as applicable);

(iii) any property for which a taxpayer is making a change in depreciation under § 1. 446-1(e)(2)(ii)( d )( 2 )( vi ) or ( vii );

(iv) any property subject to § 167(g) regarding property depreciated under the income forecast method;

(v) any § 1250 property that a taxpayer is reclassifying to an asset class of Rev. Proc. 87-56, 1987-2 C. B. 674 (as clarified and modified by Rev. Proc. 88-22, 1988-1 C. B. 785), or Rev. Proc. 83-35, 1983-1 C. B. 745, as appropriate, that does not explicitly include § 1250 property (for example, asset class 57. 0, Distributive Trades and Services);

(vi) any property for which a taxpayer is revoking a timely valid election, or making a late election, under § 167, § 168, § 179, § 1400I, § 1400L(c), former § 168, § 13261(g)(2) or (3) of the Revenue Reconciliation Act of 1993 (1993 Act), 1993-3 C. B. 1, 128 (relating to amortizable § 197 intangibles), or any additional first year depreciation deduction provision of the Code (for example, § 168(k), § 168(l), § 1400L(b), or § 1400N(d)). A taxpayer may request consent to revoke or make the election by submitting a request for a letter ruling under Rev. Proc. 2025-1, 2025-1 I. R. B. 1 (or successor). However, if a taxpayer is revoking or making an election under § 179, see § 179(c) and § 1. 179-5. See § 1. 446-1(e)(2)(ii)( d )( 3 )( iii );

(vii) any property for which depreciation is determined under § 56(g)(4)(A) (as in effect on the day before the date of enactment of the TCJA) or § 167 (other than under § 168, § 1400I, § 1400L(c), former § 168, or any additional first year depreciation deduction provision of the Code (for example, § 168(k), § 168(l), § 1400L(b), or § 1400N(d)) and a taxpayer is changing the useful life of the property. A change in the useful life of property is corrected by adjustments in the applicable taxable year provided under § 1. 446-1(e)(2)(ii)( d )( 5 )( iv ). However, this section 6. 01(1)(c)(vii) does not apply if the taxpayer is changing to or from a useful life, recovery period, or amortization period that is specifically assigned by the Code (for example, § 167(f)(1), § 168(c)), the regulations thereunder, or other guidance published

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in the Internal Revenue Bulletin and, therefore, this change is a change in method of accounting (unless section 6. 01(1)(c)(xv) of this revenue procedure applies). See § 1. 446-1(e)(2)(ii)( d )( 3 )( i );

(viii) any depreciable property for which the use changes in the hands of the same taxpayer. See § 1. 446-1(e)(2)(ii)( d ) ( 3 )( ii ). But see sections 6. 04 and 6. 05 of this revenue procedure for changing to the methods of accounting provided in § 1. 168(i)-1(c)(2)(ii)(I) or § 1. 168(i)-1(h) (2), and § 1. 168(i)-4, respectively;

(ix) any property for which depreciation is determined in accordance with § 1. 167(a)-11 (regarding the Class Life Asset Depreciation Range System (ADR));

(x) any change in method of accounting involving a change from deducting the cost or other basis of any property as an expense to capitalizing and depreciating the cost or other basis, or vice versa (but see section 11. 08 of this revenue procedure for making such a change in method of accounting under the final tangible property regulations);

(xi) any change in method of accounting involving a change from one permissible method of accounting for the property to another permissible method of accounting for the property. For example:

(A) a change from the straight-line method of depreciation to the income forecast method of depreciating for videocassettes. See Rev. Rul. 89-62, 1989-1 C. B. 78; or

(B) a change from charging the depreciation reserve with costs of removal and crediting the depreciation reserve with salvage proceeds to deducting costs of removal as an expense (provided the costs of removal are not required to be capitalized under any provision of the Code, such as § 263(a)) and including salvage proceeds in taxable income (see section 6. 02 of this revenue procedure for making this change for property for which depreciation is determined under § 167);

(xii) any change in method of accounting involving both a change from treating the cost or other basis of the property as nondepreciable or nonamortizable property to treating the cost or other basis of the property as depreciable or amortizable property and the adoption of a

method of accounting for depreciation requiring an election under § 167, § 168, § 1400I, § 1400L(c), former § 168, § 13261(g)(2) or (3) of the 1993 Act, or any additional first year depreciation deduction provision of the Code (for example, § 168(k), § 168(l), § 1400L(b), or § 1400N(d)) (for example, a change in the treatment of the space consumed in landfills placed in service in 2006 from nondepreciable to depreciable property (assuming section 6. 01(1)(c)(xiii) of this revenue procedure does not apply) and the making of an election under § 168(f) (1) to depreciate this property under the unit-of-production method of depreciation under § 167);

(xiii) any change in method of accounting for any item of income or deduction other than depreciation, even if the change results in a change in computing depreciation under § 1. 446-1(e)(2)(ii)( d )( 2 )( i ), ( ii ), ( iii ), ( iv ), ( v ), ( vi ), ( vii ), or ( viii ). For example, a change in method of accounting involving:

(A) a change in inventory costs (for example, when property is reclassified from inventory property to depreciable property, or vice versa ) (but see section 11. 02 of this revenue procedure for making a change in method of accounting from inventory property to depreciable property for unrecoverable line pack gas or unrecoverable cushion gas, and section 11. 06 of this revenue procedure for making a change in method of accounting from inventory property to depreciable property for rotable spare parts); or

(B) a change in the character of a transaction from sale to lease, or vice versa (but see section 6. 03 of this revenue procedure for making this change);

(xiv) a change from determining depreciation under § 168 to determining depreciation under former § 168 for any property subject to the transition rules in § 203(b) or § 204(a) of the Tax Reform Act of 1986, 1986-3 (Vol. 1) C. B. 1, 60-80; (xv) any change in the placed-in-service date of a depreciable or amortizable property. This change is corrected by adjustments in the applicable taxable year provided under § 1. 446-1(e)(2)(ii)( d )( 5 ) ( v );

(xvi) any property for which the taxpayer has claimed a federal income tax

credit ( e.g., the rehabilitation credit under § 47), unless the change does not alter the amount of the federal income tax credit;

(xvii) any qualified improvement property, as defined in § 168(e)(6), placed in service by the taxpayer after December 31, 2017, to which section 6. 18 of this revenue procedure applies;

(xviii) any property to which section 4 or 5 of Rev. Proc. 2020-22, 2020-18 I. R. B. 745, applies. (See sections 4. 02 and 4. 03, or 5. 02 of Rev. Proc. 2020-22, as applicable, for making any changes to depreciation for such property. );

(xix) any change in method of accounting to which section 6. 20 of this revenue procedure applies; or

(xx) the change in method of accounting specified in section 6.21 of this revenue procedure.

(2) Certain eligibility rules inapplica- ble . The eligibility rule in section 5. 01(1) (d) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, does not apply to this change. If during any of the five taxable years ending with the year of change, a taxpayer requested or made a change in method of accounting from expensing to capitalizing, or vice versa, the cost or other basis of an asset, the eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13 is not applicable to a change under this section 6. 01 for that same asset. (3) Additional requirements . A taxpayer also must comply with the following:

(a) Permissible method of accounting for depreciation . A taxpayer must change to a permissible method of accounting for depreciation for the item of depreciable or amortizable property. The permissible method of accounting is the same method that determines the depreciation allowable for the item of property (as provided in section 6. 01(7) of this revenue procedure).

(b) Statements required . A taxpayer (including a qualified small taxpayer as defined in section 6.01(4)(b) of this revenue procedure) must provide the following statements, if applicable, and attach them to the completed Form 3115:

(i) a detailed description of the present and proposed methods of accounting. A general description of these methods of accounting is unacceptable (for example, MACRS to MACRS, erroneous method

June 9, 2025 1490 Bulletin No. 2025–24

to proper method, claiming less than the depreciation allowable to claiming the depreciation allowable);

(ii) to the extent not provided elsewhere on the Form 3115, a statement describing the taxpayer’s business or income-producing activities. Also, if the taxpayer has more than one business or income-producing activity, a statement describing the taxpayer’s business or income-producing activity in which the item of property at issue is primarily used by the taxpayer;

(iii) to the extent not provided elsewhere on the Form 3115, a statement of the facts and law supporting the proposed method of accounting, new classification of the item of property, and new asset class in, as appropriate, Rev. Proc. 87-56 or Rev. Proc. 83-35. If the taxpayer is the owner and lessor of the item of property at issue, the statement of the facts and law supporting the new asset class also must describe the business or income-producing activity in which that item of property is primarily used by the lessee;

(iv) to the extent not provided elsewhere on the Form 3115, a statement identifying the year in which the item of property was placed in service by the taxpayer;

(v) if any item of property is public utility property within the meaning of § 168(i)(10) or former § 167(l)(3)(A), as applicable, a statement providing that the taxpayer agrees to the following additional terms and conditions:

(A) a normalization method of accounting (within the meaning of former § 167(l) (3)(G), former § 168(e)(3)(B), or § 168(i) (9), as applicable) will be used for the public utility property subject to the Form 3115; (B) as of the beginning of the year of change, the taxpayer will adjust its deferred tax reserve account or similar reserve 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; and

(C) 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;

(vi) if the taxpayer is changing the classification of an item of § 1250 property placed in service after August 19, 1996, to a retail motor fuels outlet under § 168(e) (3)(E)(iii), a statement containing the following representation: “For purposes of § 168(e)(3)(E)(iii) of the Internal Revenue Code, the taxpayer represents that (A) 50 percent or more of the gross revenue generated from the item of § 1250 property is from the sale of petroleum products (not including gross revenue from related services, such as the labor cost of oil changes and gross revenue from the sale of nonpetroleum products such as tires and oil filters), (B) 50 percent or more of the floor space in the item of property is devoted to the sale of petroleum products (not including floor space devoted to related services, such as oil changes and floor space devoted to nonpetroleum products such as tires and oil filters), or (C) the item of § 1250 property is 1,400 square feet or less. ”; and

(vii) if the taxpayer is changing the classification of an item of property from § 1250 property to § 1245 property under § 168 or former § 168, a statement of the facts and law supporting the new § 1245 property classification, and a statement containing the following representation: “Each item of depreciable property that is the subject of the Form 3115 filed under section 6. 01 of Rev. Proc. 2025-23 for the year of change beginning [ Insert the date] , and that is reclassified from [ Insert, as appropriate: nonresidential real prop- erty, residential rental property, qualified leasehold improvement property, quali- fied restaurant property, qualified retail improvement property, qualified improve- ment property as defined in § 168(e)(6) (as amended by § 13204 of the TCJA), 19-year real property, 18-year real prop- erty, or 15-year real property ] to an asset class of [ Insert, as appropriate, either: Rev. Proc. 87-56, 1987-2 C.B. 674, or Rev. Proc. 83-35, 1983-1 C.B. 745 ] that does not explicitly include § 1250 property, is § 1245 property for depreciation purposes. ”

(4) Reduced filing requirement for qualified small taxpayers .

(a) In general . A qualified small taxpayer, as defined in section 6.01(4)(b)

of this revenue procedure, is required to complete only the following information on Form 3115 (Rev. December 2022) to make this change:

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I; (iv) Part II, all lines except lines 13, 15b, 16c, 17, and 19; (v) Part IV, all lines except line 25; and (vi) Schedule E. (b) Definition of qualified small tax- payer . A “qualified small taxpayer” is a taxpayer whose average annual gross receipts, as determined under § 1. 263(a)-3(h)(3), for the three preceding taxable years is less than or equal to $10,000,000.

(5) Section 481(a) adjustment . Because the adjusted basis of the property is changed as a result of a method change made under this section 6. 01 ( see section 6. 01(6) of this revenue procedure), items are duplicated or omitted. Accordingly, this change is made with a § 481(a) adjustment. This adjustment may result in either a negative § 481(a) adjustment (a decrease in taxable income) or a positive § 481(a) adjustment (an increase in taxable income) and may be a different amount for regular tax, alternative minimum tax, and adjusted current earnings purposes. This § 481(a) adjustment equals the difference between the total amount of depreciation taken into account in computing taxable income for the property under the taxpayer’s present method of accounting (including the amount attributable to any property described in section 6. 01(1)(b) of this revenue procedure that is included in the taxpayer’s Form 3115), and the total amount of depreciation allowable for the property under the taxpayer’s proposed method of accounting (as determined under section 6. 01(7) of this revenue procedure, and including the amount attributable to any property described in section 6. 01(1)(b) of this revenue procedure that is included in the taxpayer’s Form 3115), for open and closed years prior to the year of change. However, the amount of the § 481(a) adjustment must be adjusted to account for the proper amount of the depreciation allowable

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that is required to be capitalized under any provision of the Code (for example, § 263A) at the beginning of the year of change .

(6) Basis adjustment . As of the beginning of the year of change, the basis of depreciable property to which this section 6.01 applies must reflect the reductions required by § 1016(a)(2) for the depreciation allowable for the property (as determined under section 6 .01(7) of this revenue procedure) .

(7) Meaning of depreciation allowable . (a) In general . Section 6 .01(7) of this revenue procedure provides the amount of the depreciation allowable determined under § 56(a)(1), § 56(g)(4)(A) (as in effect on the day before the date of enactment of the TCJA), § 167, § 168, or § 197, or former § 168, § 1400I, or § 1400L(c) . This amount, however, may be limited by other provisions of the Code (for example, § 280F) .

(b) Section 56(a)(1) property . The depreciation allowable for any taxable year for property for which depreciation is determined under § 56(a)(1) is determined by using the depreciation method, recovery period, and convention provided for under § 56(a)(1) that applies for the property’s placed-in-service date .

(c) Section 56(g)(4)(A) property . The depreciation allowable for any taxable year for property for which depreciation is determined under § 56(g)(4)(A) (as in effect on the day before the date of enactment of the TCJA) is determined by using the depreciation method, recovery period or useful life, as applicable, and convention provided for under § 56(g)(4)(A) (as in effect on the day before the date of enactment of the TCJA) that applies for the property’s placed-in-service date .

(d) Section 167 property . Generally, for any taxable year, the depreciation allowable for property for which depreciation is determined under § 167, is determined either:

(i) under the depreciation method adopted by the taxpayer for the property; or

(ii) if that depreciation method does not result in a reasonable allowance for depreciation or the taxpayer has not adopted a depreciation method for the property, under the straight-line depreciation method .

For determining the estimated useful life and salvage value of the property, see § 1 .167(a)-1(b) and (c), respectively .

The depreciation allowable for any taxable year for property subject to § 167(f) (regarding certain property excluded from § 197) is determined by using the depreciation method and useful life prescribed in § 167(f) . If computer software is depreciated under § 167(f) (1) and is qualified property (as defined in § 168(k)(2) as amended by the TCJA and § 1.168(k)-2), qualified property (as defined in § 168(k)(2) as in effect on the day before the date of enactment of the TCJA and § 1 .168(k)-1), 50-percent bonus depreciation property (as defined in § 168(k)(4) (as in effect on the day before the date of enactment of the Economic Stimulus Act of 2008, Pub . L . No . 110-185, 122 Stat . 613 (February 13, 2008)) and § 1.168(k)-1), qualified disaster assistance property (as defined in § 168(n)(2) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018, Pub . L . No . 115-141, Division U, 132 Stat . 1211 (March 23, 2018)), qualified New York Liberty Zone (Liberty Zone) property (as defined in § 1400L(b)(2) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018) and § 1.1400L(b)-1), qualified Gulf Opportunity Zone (GO Zone) property (as defined in § 1400N(d)(2) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018) and sections 2 .02 and 2 .03 of Notice 2006-77, 2006-2 C .B . 590, as clarified, modified, and amplified by Notice 2007-36, 2007-1 C .B . 1000), specified Gulf Opportunity Zone extension property (GO Zone extension property) (as defined in § 1400N(d)(6) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018) and section 4 of Notice 2007-36), or qualified Recovery Assistance (RA) property (as defined in sections 2.02 and 2 .03 of Notice 2008-67, 2008-32 I .R .B . 307), the depreciation allowable for that computer software under § 167(f)(1) is also determined by taking into account the additional first year depreciation deduction provided by § 168(k), § 168(n) (as in effect on the day before the date of enactment of the Tax Technical Cor

rections Act of 2018), § 1400L(b) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), or § 1400N(d) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), or by § 15345(a)(1) and (d)(1) of the Food, Conservation, and Energy Act of 2008, Pub . L . No . 110-246, 122 Stat . 1651 (June 18, 2008), as applicable, unless the taxpayer made a timely valid election not to deduct any additional first year depreciation for the computer software .

(e) Section 168 property . The depreciation allowable for any taxable year for property for which depreciation is determined under § 168, is determined as follows:

(i) by using either: (A) the general depreciation system in § 168(a); or

(B) the alternative depreciation system in § 168(g) if the property is required to be depreciated under the alternative depreciation system pursuant to § 168(g)(1) or other provisions of the Code (for example, property described in § 263A(e)(2)(A) or § 280F(b)(1)) . Property required to be depreciated under the alternative depreciation system pursuant to § 168(g)(1) includes property in a class (as set out in § 168(e)) for which the taxpayer made a timely valid election under § 168(g)(7);

(ii) if the property is qualified property, 50-percent bonus depreciation property, qualified disaster assistance property, Liberty Zone property, GO Zone property, GO Zone extension property, or RA property, by also taking into account the additional first year depreciation deduction provided by § 168(k), § 168(n) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), § 1400L(b) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), or § 1400N(d) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), or by § 15345(a)(1) and (d)(1) of the Food, Conservation, and Energy Act of 2008, as applicable, unless the taxpayer made a timely valid election not to deduct the additional first year depreciation (or made a deemed election not to deduct

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the additional first year depreciation; for further guidance, see, for example, Rev . Proc . 2002-33, 2002-1 C .B . 963, Rev . Proc . 2003-50, 2003-2 C .B . 119, Notice 2006-77, Notice 2008-67, section 5 of Rev . Proc . 2011-26, 2011-16 I .R .B . 664, Rev . Proc . 2015-48, 2015-40 I .R .B . 469, or Rev . Proc . 2019-33, 2019-34 I .R .B . 662) for the class of property (as defined in § 1 .168(k)-2(f)(1)(ii), § 1 .168(k)-1(e) (2), § 1 .1400L(b)-1(e)(2), or section 4 .02 of Notice 2006-77, as applicable) in which that property is included;

(iii) if the property is qualified second generation biofuel plant property (as defined in § 168(l)(2) and (3)) or qualified cellulosic biofuel plant property (as defined in former § 168(l)(2) and (3)), by also taking into account the additional first year depreciation deduction provided by § 168(l)(1), unless the taxpayer made a timely valid election not to deduct the additional first year depreciation for the property; and

(iv) if the property is qualified reuse and recycling property (as defined in § 168(m) (2)), by also taking into account the additional first year depreciation deduction provided by § 168(m)(1), unless the taxpayer made a timely valid election not to deduct the additional first year depreciation for the property .

(f) Section 197 property . The amortization allowable for any taxable year for an amortizable § 197 intangible (including any property for which a timely election under § 13261(g)(2) of the 1993 Act was made) is determined in accordance with § 1 .197-2(f) .

(g) Former § 168 property . The depreciation allowable for any taxable year for property subject to former § 168 is determined by using either:

(i) the accelerated method of cost recovery applicable to the property (for example, for 5-year property, the recovery method under former § 168(b)(1)); or

(ii) the straight-line method applicable to the property if the property is required to be depreciated under the straight-line method (for example, property described in former § 168(f)(2) or former § 280F(b) (2)) or if the taxpayer elected to determine the depreciation allowance under the optional straight-line percentage (for example, the straight-line method in former § 168(b)(3)) .

(h) Qualified revitalization building . The depreciation allowable for any taxable year for any qualified revitalization building (as defined in § 1400I(b)(1) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018)) for which the taxpayer has made a timely valid election under § 1400I(a) is determined as follows:

(i) if the taxpayer elected to deduct one-half of any qualified revitalization expenditures (as defined in § 1400I(b)(2) and as limited by § 1400I(c) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018)) chargeable to a capital account with respect to the qualified revitalization building for the taxable year in which the building is placed in service by the taxpayer, the depreciation allowable for the qualified revitalization building’s placedin-service year is equal to one-half of the qualified revitalization expenditures for the building and the depreciation allowable for the remaining depreciable basis of the qualified revitalization building for its placed-in-service year and subsequent taxable years is determined using the general depreciation system of § 168(a) or the alternative depreciation system of § 168(g), as applicable; or

(ii) if the taxpayer elected to amortize all of the qualified revitalization expenditures chargeable to a capital account with respect to the qualified revitalization building ratably over the 120-month period beginning with the month in which the building is placed in service, the depreciation allowable for the qualified revitalization expenditures is determined in accordance with this election and the depreciation allowable for the remaining depreciable basis of the qualified revitalization building is determined using the general depreciation system of § 168(a) or the alternative depreciation system of § 168(g), as applicable .

(i) Qualified New York Liberty Zone leasehold improvement property . The depreciation allowable for any taxable year for qualified New York Liberty Zone leasehold improvement property (as defined in § 1400L(c)(2) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018)) is determined by using the depreciation method and recovery period prescribed in

§ 1400L(c) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018) unless the taxpayer made a timely valid election under § 1400L(c)(5) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018) not to use that recovery period .

(8) Concurrent automatic change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115 . If one or more of the changes in that single Form 3115 generate a negative § 481(a) adjustment and other changes in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment and a single positive § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment. For example, a taxpayer files a single Form 3115 to change the depreciation methods, recovery periods, and/ or conventions under § 168(a) resulting from the reclassification of two computers from nonresidential real property to 5-year property, one office desk from nonresidential real property to 7-year property, and two office desks from 5-year property to 7-year property . On that Form 3115, the taxpayer must provide either (i) a single net § 481(a) adjustment that covers all the changes resulting from all of these reclassifications, or (ii) a single negative § 481(a) adjustment that covers the changes resulting from the reclassifications of the two computers and one office desk from nonresidential real property to 5-year property and 7-year property, respectively, and a single positive § 481(a) adjustment that covers the changes resulting from the reclassifications of the two office desks from 5-year property to 7-year property .

(b) A taxpayer making both this change and a change to a UNICAP method under section 12 .01, 12 .02, 12 .08, or 12 .12 of this revenue procedure (as applicable) for the same year of change should file a single Form 3115 for both changes, in which case the taxpayer must enter the

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designated automatic accounting method change numbers for both changes on the appropriate line on that Form 3115. See section 6. 03(1)(b) of Rev. Proc. 2015-13 for information on making concurrent changes. For example, a qualified small taxpayer must include on the single Form 3115 the information required by section 6. 01(4)(a) of this revenue procedure for this change and the information required by the lines on Form 3115 applicable to the UNICAP method change, including Part II lines 14 and 15, Part IV, and Schedule D, and must include a separate response to each line on Form 3115 that is applicable to both changes (such as Part II, lines 6b, 7, 8b, 14, and, as applicable for this change, Part IV) for which the taxpayer’s response is different for this change and the change to a UNICAP method.

(9) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6. 01 is “7. ” (10) Contact information . For further information regarding a change under this section, contact James Liechty at (202) 317-7005 (not a toll-free number).. 02 Permissible to permissible method of accounting for depreciation

(1) Description of change . This change applies to a taxpayer that wants to change from a permissible method of accounting for depreciation under § 56(g)(4)(A)(iv) (as in effect on the day before the date of enactment of Public Law 115-97, 131 Stat. 2054 (Dec. 22, 2017), commonly referred to as the Tax Cuts and Jobs Act (TCJA)) or § 167 to another permissible method of accounting for depreciation under § 56(g) (4)(A)(iv) (as in effect on the day before the date of enactment of the TCJA) or § 167. Pursuant to § 1. 167(a)-7(a) and (c), a taxpayer may account for depreciable property either by treating each individual asset as an account or by combining two or more assets in a single account and, for each account, depreciation allowances are computed separately.

(2) Applicability (a) In general . This change applies to any taxpayer wanting to make a change in method of accounting for depreciation specified in section 6.02(4) of this revenue procedure for the property in an account:

(i) for which the present and proposed methods of accounting for depreciation specified in section 6.02(4) of this revenue procedure are permissible methods for the property under § 56(g)(4)(A)(iv) (as in effect on the day before the date of enactment of the TCJA) or § 167; and

(ii) that is owned by the taxpayer at the beginning of the year of change.

(b) Inapplicability . This change does not apply to:

(i) a taxpayer that is required under § 263A and the regulations thereunder to capitalize the costs with respect to which the taxpayer wants to change its method of accounting under this section 6. 02 if the taxpayer is not capitalizing these costs, unless the taxpayer concurrently changes its method to capitalize these costs in conjunction with a change to a UNICAP method under section 12. 01, 12. 02, 12. 08, or 12. 12 of this revenue procedure (as applicable);

(ii) any property to which § 1016(a)(3) (regarding property held by a tax-exempt organization) applies;

(iii) any property described in § 167(f) (regarding certain property excluded from § 197);

(iv) any property subject to § 167(g) (regarding property depreciated under the income forecast method);

(v) any property for which depreciation is determined under § 56(a)(1), § 56(g)(4)(A)(i), (ii), (iii), or (v) (as in effect on the day before the date of enactment of the TCJA), § 168, § 1400I (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018, Pub. L. No. 115-141, Division U, 132 Stat. 1211 (March 23, 2018)), § 1400L(c) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), § 168 prior to its amendment in 1986 (former § 168), or any additional first year depreciation deduction provision of the Code (for example, § 168(k), § 168(l), § 1400L(b) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), or § 1400N(d) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018));

(vi) any property that the taxpayer elected under § 168(f)(1) or former § 168(e)(2) to exclude from the appli

cation of, respectively, § 168 or former § 168;

(vii) any property for which depreciation is determined in accordance with § 1. 167(a)-11 (ADR);

(viii) any depreciable property for which the taxpayer is changing the depreciation method pursuant to § 1. 167(e)-1(b) (change from declining-balance method to straight-line method), § 1. 167(e)-1(c) (certain changes for § 1245 property), or § 1. 167(e)-1(d) (certain changes for § 1250 property). These changes must be made prospectively and are not permitted under the cited regulations for property for which the depreciation is determined under § 168, § 1400I (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), § 1400L(c) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), former § 168, or any additional first year depreciation deduction provision of the Code (for example, § 168(k), § 168(l), § 1400L(b) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018), or § 1400N(d) (as in effect on the day before the date of enactment of the Tax Technical Corrections Act of 2018)); or

(ix) any distributor commissions (as defined by section 2 of Rev. Proc. 200038, 2000-2 C.B. 310, as modified by Rev. Proc. 2007-16, 2007-1 C. B. 358) for which the taxpayer is changing the useful life under the distribution fee period method or the useful life method (both described in Rev. Proc. 2000-38). A change in this useful life is corrected by adjustments in the applicable taxable year provided under § 1. 446-1(e)(2)(ii)( d )( 5 )( iv ).

(3) Certain eligibility rule inapplica- ble . The eligibility rule in section 5. 01(1) (d) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, does not apply to this change. (4) Changes covered . This section 6. 02 only applies to the following changes in methods of accounting for depreciation:

(a) a change from the straight-line method to the sum-of-the-years-digits method, the sinking fund method, the unit-of-production method, or the declining-balance method using any proper percentage of the straight-line rate;

(b) a change from the declining-balance method using any percentage of the

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straight-line rate to the sum-of-the-yearsdigits method, the sinking fund method, or the declining-balance method using a different proper percentage of the straightline rate;

(c) a change from the sum-of-the-yearsdigits method to the sinking fund method, the declining-balance method using any proper percentage of the straight-line rate, or the straight-line method;

(d) a change from the unit-of-production method to the straight-line method;

(e) a change from the sinking fund method to the straight-line method, the unit-of-production method, the sum-ofthe-years-digits method, or the declining-balance method using any proper percentage of the straight-line rate;

(f) a change in the interest factor used in connection with a compound interest method or sinking fund method;

(g) a change in averaging convention as set forth in § 1. 167(a)-10(b). However, as specifically provided in § 1.167(a)-10(b), in any taxable year in which an averaging convention substantially distorts the depreciation allowance for the taxable year, it may not be used ( see Rev. Rul. 73-202, 1973-1 C. B. 81); (h) a change from charging the depreciation reserve with costs of removal and crediting the depreciation reserve with salvage proceeds to deducting costs of removal as an expense and including salvage proceeds in taxable income as set forth in § 1. 167(a)-8(e)(2). See Rev. Rul. 74-455, 1974-2 C. B. 63. This section 6. 02 applies to this change, however, only if:

(i) the change is applied to all items in the account for which the change is being made; and

(ii) the removal costs are not required to be capitalized under any provision of the Code (for example, § 263(a), § 263A, or § 280B);

(i) a change from crediting the depreciation reserve with the salvage proceeds realized on normal retirement sales to computing and recognizing gains and losses on the sales ( see Rev. Rul. 70-165, 1970-1 C. B. 43); (j) a change from crediting ordinary income (including the combination method of crediting the lesser of estimated salvage value or actual salvage proceeds to the depreciation reserve, with any excess of salvage proceeds over estimated

salvage value credited to ordinary income) with the salvage proceeds realized on normal retirement sales, to computing and recognizing gains and losses on the sales ( see Rev. Rul. 70-166, 1970-1 C. B. 44);

(k) a change from item accounting for specific assets to multiple asset accounting (pooling) for the same assets, or vice versa ;

(l) a change from one type of multiple asset accounting (pooling) for specific assets to a different type of multiple asset accounting (pooling) for the same assets;

(m) a change from one method described in Rev. Proc. 2000-38 for amortizing distributor commissions (as defined by section 2 of Rev. Proc. 2000-38) to another method described in Rev. Proc. 2000-38 for amortizing distributor commissions; or

(n) a change from pooling to a single asset, or vice versa, for distributor commissions (as defined by section 2 of Rev. Proc. 2000-38) for which the taxpayer is using the distribution fee period method or the useful life method (both described in Rev. Proc. 2000-38).

(5) Additional requirements . A taxpayer also must comply with the following:

(a) Basis for depreciation . At the beginning of the year of change, the basis for depreciation of property to which this change applies is the adjusted basis of the property as provided in § 1011 at the end of the taxable year immediately preceding the year of change (determined under taxpayer’s present method of accounting for depreciation). If applicable under the taxpayer’s proposed method of accounting for depreciation, this adjusted basis is reduced by the estimated salvage value of the property (for example, a change to the straight-line method).

(b) Rate of depreciation . The rate of depreciation for property changed to:

(i) the straight-line or the sum-of-theyears-digits method of depreciation must be based on the remaining useful life of the property as of the beginning of the year of change; or

(ii) the declining-balance method of depreciation must be based on the useful life of the property measured from the placed-in-service date, and not the expected remaining life from the date the change becomes effective.

(c) Regulatory requirements . For changes in method of depreciation to the sum-of-the-years-digits or declining-balance method, the property must meet the requirements of § 1. 167(b)-0 or § 1. 167(c)-1, as appropriate.

(d) Public utility property . If any item of property is public utility property within the meaning of former § 167(l)(3)(A), the taxpayer (including a qualified small taxpayer as defined in section 6.01(4)(b) of this revenue procedure) must attach to the Form 3115 a statement providing that the taxpayer agrees to the following additional terms and conditions:

(i) a normalization method of accounting within the meaning of former § 167(l) (3)(G) will be used for the public utility property subject to the Form 3115; and

(ii) 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. (6) Reduced filing requirement for qualified small taxpayers . A qualified small taxpayer, as defined in section 6. 01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev. December 2022) to make this change:

(a) The identification section of page 1 (above Part I);

(b) The signature section at the bottom of page 1;

(c) Part I; (d) Part II, all lines except lines 13, 15b, 16, 17, and 19; (e) Part IV, line 25; and (f) Schedule E. (7) Section 481(a) adjustment . Because the adjusted basis of the property is not changed as a result of a method change made under this section 6. 02, no items are being duplicated or omitted. Accordingly, a § 481(a) adjustment is neither required nor permitted.

(8) Concurrent automatic change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets.

(b) A taxpayer making both this change and a change to a UNICAP method under section 12. 01, 12. 02, 12. 08, or 12. 12 of

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this revenue procedure (as applicable) for the same year of change should file a single Form 3115 for both changes, in which case the taxpayer must enter the designated automatic accounting method change numbers for both changes on the appropriate line on that Form 3115 . See section 6 .03(1)(b) of Rev . Proc . 2015-13 for information on making concurrent changes. For example, a qualified small taxpayer must include on the single Form 3115 the information required by section 6 .02(6) of this revenue procedure for this change and the information required by the lines on Form 3115 applicable to the UNICAP method change, including Part II lines 14 and 15, Part IV, and Schedule D, and must include a separate response to each line on Form 3115 that is applicable to both changes (such as Part II lines 6b, 7, 8b, 14, and, as applicable for this change, Part IV) for which the taxpayer’s response is different for this change and the change to a UNICAP method .

(9) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6 .02 is “8 .” (10) Contact information . For further information regarding a change under this section, contact Bruce Chang at (202) 317-7005 (not a toll-free number) . .03 Sale, lease, or financing transac- tions .

(1) Description of change and scope . (a) Applicability . This change applies to a taxpayer that wants to change its method of accounting from:

(i) improperly treating property as sold by the taxpayer to properly treating property as leased or financed by the taxpayer;

(ii) improperly treating property as leased by the taxpayer to properly treating property as sold or financed by the taxpayer;

(iii) improperly treating property as financed by the taxpayer to properly treating property as sold or leased by the taxpayer;

(iv) improperly treating property as purchased by the taxpayer to properly treating property as leased by the taxpayer; and

(v) improperly treating property as leased by the taxpayer to properly treating property as purchased by the taxpayer .

(b) Inapplicability . This change does not apply to:

(i) a rent-to-own dealer that wants to change its method of accounting for rentto-own contracts described in section 3 of Rev . Proc . 95-38, 1995-2 C .B . 397; or

(ii) a taxpayer that holds assets for sale or lease, if any asset so held is not the subject of a sale or lease transaction as of the beginning of the year of change .

(2) Manner of making the change . (a) Required statement . A taxpayer changing its method of accounting under this section 6 .03 must submit a statement with the Form 3115 that provides the name of the counterparty to the sale, lease, or financing transactions as of the beginning of the year of change .

(b) Section 481(a) adjustment . A change under this section 6 .03 is made with a § 481(a) adjustment .

(3) No ruling on the characteriza- tion of any transaction as a sale, lease, or financing transaction . The consent granted under section 9 of Rev . Proc . 2015-13 for a change specified in this section 6 .03 is not a determination by the Commissioner that the taxpayer has properly characterized any transaction as a sale, lease, or financing transaction and does not create any presumption that the proposed characterization of any transaction as a sale, lease, or financing transaction is permissible . The director will ascertain whether the taxpayer’s characterization of any transaction as a sale, lease, or financing transaction is permissible .

(4) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6 .03 is “10 .” (5) Contact information . For further information regarding a change under this section, contact Edward Schwartz at (202) 317-7006 (not a toll-free number) . .04 Change in general asset account treatment due to a change in the use of MACRS property .

(1) Description of change . (a) Applicability . This change applies to a taxpayer that wants to change the method of accounting for general asset account treatment of MACRS property (as defined in § 1.168(b)-1(a)(2)) to the method of accounting provided in

§ 1 .168(i)-1(c)(2)(ii)(I) or § 1 .168(i)-1(h) (2), which applies when there is a change in the use of MACRS property pursuant to § 1 .168(i)-4(d) .

(b) Taxpayer has not adopted a method of accounting for the item of property . If a taxpayer does not satisfy section 6 .04(1) (a) of this revenue procedure for an item of MACRS property because a change in the use of this item of MACRS property occurred in the taxable year immediately preceding the year of change (1-year change in use property), the taxpayer may change from the impermissible method for general asset account treatment to the permissible method provided in § 1 .168(i)-1(c)(2)(ii)(I) or § 1 .168(i)-1(h) (2) for the 1-year change in use property by filing a Form 3115. Alternatively, the taxpayer may change from the impermissible method for general asset account treatment to the permissible method provided in § 1 .168(i)-1(c)(2)(ii)(I) or § 1 .168(i)-1(h)(2) for a 1-year change in use property by filing an amended federal income tax return, or an administrative adjustment request under § 6227 (AAR), as applicable, for the year of change in the use of such property provided such filing occurs prior to the date the taxpayer files its federal income tax return for the taxable year succeeding the year of change in the use of such property .

(c) Inapplicability . (i) The change described in section 6 .04(1)(a) of this revenue procedure does not apply to any property to which section 4 .05 of Rev . Proc . 2020-22, 2020-18 I .R .B . 745, applies unless the taxpayer and property are within the scope of Rev . Proc . 2021-28, 2021-27 I .R .B . 5 . (See sections 4 .02 and 4 .03 of Rev . Proc . 2020-22, as applicable, for making such changes for such property .); and

(ii) The change described in section 6 .04(1)(a) of this revenue procedure does not apply to any property to which section 5 .04 of Rev . Proc . 2020-22, 202018 I .R .B . 745, applies . (See section 5 .02 of Rev . Proc . 2020-22 for making such change for such property .) .

(2) Eligibility rule inapplicable . The eligibility rule in section 5 .01(1)(d) of Rev . Proc . 2015-13, 2015-5 I .R .B . 419, does not apply to a taxpayer making this change .

(3) Manner of making change .

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(a) The change is made on a modified cut-off basis (as defined in § 1.446-1(e) (2)(ii)( d )( 5 )( iii )) and, thus, the adjusted depreciable basis of the MACRS property as of the beginning of the year of change is recovered using the proposed method of accounting for general asset account treatment . Accordingly, a § 481(a) adjustment is neither permitted nor required . See § 1 .168(i)-1(h)(2)(ii) and (iii) for more information regarding how to establish the general asset account when a change in the use of MACRS property occurs pursuant to § 1 .168(i)-4(d) .

(b) Reduced filing requirement for qualified small taxpayers . A qualified small taxpayer, as defined in section 6 .01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev . December 2022) to make this change:

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I; (iv) Part II, all lines except lines 13, 15b, 16, 17, and 19; (v) Part IV, line 25; and (vi) Schedule E, all lines except lines 1, 4c, 5, 6, 7b, and 7c . (4) Concurrent automatic change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets .

(b) A taxpayer making this change and a change under section 6 .05, section 6 .12(3)(b), and/or section 6 .15 of this revenue procedure for the same year of change should file a single Form 3115 for all such changes and must enter the designated automatic accounting method change numbers for the 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 .

(5) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6 .04 is “87 .” (6) Contact information . For further information regarding a change under this section, contact Elizabeth Binder at (202) 317-7005 (not a toll-free number) .

.

and property are within the scope of Rev . Proc . 2021-28, 2021-27 I .R .B . 5 . (See sections 4 .02 and 4 .03, or 5 .02 of Rev . Proc . 2020-22, as applicable, for making such change for such property .);

(ii) The change described in section 6 .05(1)(a)(i) of this revenue procedure does not apply to any property to which section 5 .04 of Rev . Proc . 2020-22, 202018 I .R .B . 745, applies . (See section 5 .02 of Rev . Proc . 2020-22 for making such change for such property .); and

(iii) The change described in this section 6 .05 does not apply to any property that is not owned by the taxpayer at the beginning of the year of change .

(2) Eligibility rule inapplicable . The eligibility rule in section 5 .01(1)(d) of Rev . Proc . 2015-13, 2015-5 I .R .B . 419, does not apply to a taxpayer making this change .

(3) Reduced filing requirement for qualified small taxpayers . A qualified small taxpayer, as defined in section 6 .01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev . December 2022) to make this change:

(a) The identification section of page 1 (above Part I);

(b) The signature section at the bottom of page 1;

(c) Part I; (d) Part II, all lines except lines 13, 15b, 16, 17, and 19; (e) Part IV, all lines except line 25; and (f) Schedule E, all lines except lines 1, 4c, 5, 6, 7b, and 7c . (4) Section 481(a) adjustment . A taxpayer changing its method of accounting under this section 6 .05 is required to calculate a § 481(a) adjustment as of the first day of the year of change as if the proposed method of accounting had always been used by the taxpayer beginning with the taxable year in which the change in the use of the MACRS property occurred by the taxpayer .

(5) Concurrent automatic change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115 . If one or more of the changes in that single Form 3115 generate a negative § 481(a) adjust

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ment and other changes in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment and a single positive § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment.

(b) A taxpayer making this change and a change under section 6. 04, section 6. 12(3)(b), and/or section 6. 15 of this revenue procedure for the same year of change should file a single Form 3115 for all such changes and must enter the designated automatic accounting method change numbers for the 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.

(6) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6. 05 is “88. ” (7) Contact information . For further information regarding a change under this section, contact Elizabeth Binder at (202) 317-7005 (not a toll-free number).. 06 Depreciation of qualified non-per- sonal use vans and light trucks

(1) Description of change . This change applies to a taxpayer that wants to change the method of accounting for depreciation for certain vehicles in accordance with § 1. 280F-6(f)(2)(iv). Section 1. 280F6(f)(2)(iv) applies to a truck or van that is a qualified nonpersonal use vehicle as defined under § 1.274-5T(k), was placed in service by the taxpayer before July 7, 2003, and was treated by the taxpayer as a passenger automobile under § 1. 280F-6T as in effect prior to July 7, 2003. If the taxpayer files Form 3115, in accordance with § 1. 280F-6(f)(2)(iv), the treatment of the truck or van will be changed from property to which § 280F(a) applies to property to which § 280F(a) does not apply.

(2) Reduced filing requirement for qualified small taxpayers . A qualified small taxpayer, as defined in section 6. 01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev. December 2022) to make this change:

(a) The identification section of page 1 (above Part I);

(b) The signature section at the bottom of page 1;

(c) Part I; (d) Part II, all lines except lines 13, 15b, 16, 17, and 19; (e) Part IV, all lines except line 25; and (f) Schedule E. (3) Concurrent automatic change . A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115. If one or more of the changes in that single Form 3115 generate a negative § 481(a) adjustment and other changes in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment and a single positive § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment.

(4) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6. 06 is “89. ” (5) Contact information . For further information regarding a change under this section, contact C. Dylan Durham at (202) 317-7005 (not a toll-free number).. 07 Impermissible to permissible method of accounting for depreciation or amortization for disposed depreciable or amortizable property

(1) Description of change . This change applies to a taxpayer that wants to make the change in method of accounting for depreciation or amortization (depreciation) provided under section 3 of Rev. Proc. 2007-16, 2007-1 C. B. 358, for an item of depreciable or amortizable property that has been disposed of by the taxpayer. Section 3 of Rev. Proc. 2007-16 allows a taxpayer to make a change in method of accounting for depreciation for the disposed property if the taxpayer used an impermissible method of accounting for depreciation for the property under which the taxpayer did not take into account any depreciation allowance, or did take into account some depreciation

but less than the depreciation allowable, in the year of change (as defined in section 6. 07(4) of this revenue procedure) or any prior taxable year.

(2) Applicability (a) In general . Except as provided in section 6. 07(2)(b) of this revenue procedure, this section 6. 07 applies to a taxpayer that is changing from an impermissible method of accounting for depreciation to a permissible method of accounting for depreciation for any item of depreciable or amortizable property subject to §§ 167, 168, 197, 1400I, or 1400L(c), to former § 168, or to any additional first year depreciation deduction provision of the Code (for example, § 168(k), § 168(l), § 1400L(b), or § 1400N(d)):

(i) that has been disposed of by the taxpayer during the year of change (as defined in section 6.07(4) of this revenue procedure); and

(ii) for which the taxpayer did not take into account any depreciation allowance, or did take into account some depreciation but less than the depreciation allowable (hereinafter, both are referred to as “claimed less than the depreciation allowable”), in the year of change (as defined in section 6. 07(4) of this revenue procedure) or any prior taxable year.

(b) Inapplicability . This section 6. 07 does not apply to:

(i) any property to which § 1016(a)(3) (regarding property held by a tax-exempt organization) applies;

(ii) any property for which a taxpayer is revoking a timely valid depreciation election, or making a late depreciation election, under the Code or regulations thereunder, or under other guidance published in the Internal Revenue Bulletin (including under § 13261(g)(2) or (3) of the Revenue Reconciliation Act of 1993 (1993 Act), 1993-3 C. B. 1, 128 (relating to amortizable § 197 intangibles));

(iii) any property for which the taxpayer deducted the cost or other basis of the property as an expense; or

(iv) any property disposed of by the taxpayer in a transaction to which a nonrecognition section of the Code applies (for example, § 1031, transactions subject to § 168(i)(7)(B)). However, this section 6. 07(2)(b)(iv) does not apply to property disposed of by the taxpayer in a § 1031 or § 1033 transaction if the tax

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payer elects under § 1. 168(i)-6(i) and (j) to treat the entire basis (that is, both the exchanged and excess basis (as defined in § 1. 168(i)-6(b)(7) and (8), respectively) of the replacement MACRS property (as defined in § 1.168(i)-6(b) (1)) as property placed in service by the taxpayer at the time of replacement and treat the adjusted depreciable basis of the relinquished MACRS property (as defined in § 1.168(i)-6(b)(2)) as being disposed of by the taxpayer at the time of disposition.

(3) Manner of making the change (a) Change made on an original return for the year of change . This change may be made on a taxpayer’s timely filed (including any extension) original federal tax return for the year of change (as defined in section 6.07(4) of this revenue procedure), provided the taxpayer files the original Form 3115 in accordance with section 6. 03(1)(a) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419. (b) Change made on an amended return or an AAR for the year of change . This change may also be made on an amended federal income tax return, or administrative adjustment request under § 6227 (AAR), as applicable, for the year of change (as defined in section 6.07(4) of this revenue procedure), provided:

(i)(A) the taxpayer files the original Form 3115 with the taxpayer’s amended federal income tax return for the year of change (as defined in section 6.07(4) of this revenue procedure) prior to the expiration of the period of limitation for assessment under § 6501(a) for the taxable year in which the item of depreciable or amortizable property was disposed of by the taxpayer, or if applicable (B) the partnership subject to the centralized partnership audit regime enacted as part of the Bipartisan Budget Act of 2015 (BBA partnership) files the original Form 3115 with its AAR for the year of change (as defined in section 6.07(4) of this revenue procedure) prior to the expiration of the applicable period of limitations for making adjustments under § 6235 for the reviewed year as defined in § 301.62411(a)(8) of the Procedure and Administration Regulations; and

(ii) the taxpayer’s amended federal income tax return, or AAR, as applicable, for the year of change (as defined

in section 6 .07(4) of this revenue procedure) includes the adjustments to taxable income and any collateral adjustments to taxable income or tax liability (for example, adjustments to the amount or character of the gain or loss of the disposed depreciable or amortizable property) resulting from the change in method of accounting for depreciation made by the taxpayer under this section 6 .07 .

(4) Year of change . The year of change for this change is the taxable year in which the item of depreciable or amortizable property was disposed of by the taxpayer .

(5) Certain eligibility rules inappli- cable . The eligibility rules in sections 5 .01(1)(d) and (f) of Rev . Proc . 2015-13 do not apply to this change .

(6) Filing requirements . (a) Notwithstanding section 6 .03(1)(a) of Rev . Proc . 2015-13, a taxpayer making this change in accordance with section 6 .07(3)(b) of this revenue procedure must attach the original Form 3115 to the taxpayer’s timely filed amended federal income tax return, or AAR, as applicable, for the year of change and must file the required duplicate copy (with signature) of the Form 3115 with the IRS in Ogden, UT, no later than when the original Form 3115 is filed with the amended federal income tax return, or AAR, as applicable, for the year of change . If a taxpayer is making this change in accordance with section 6 .07(3)(a) of this revenue procedure, the filing requirements in section 6 .03(1)(a) of Rev . Proc . 2015-13 apply . (b) Reduced filing requirement for qualified small taxpayers . A qualified small taxpayer, as defined in section 6 .01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev . December 2022) to make this change:

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I; (iv) Part II, all lines except lines 13, 15b, 16, 17, and 19; (v) Part IV, all lines except line 25; and (vi) Schedule E . (7) 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 .

(8) Concurrent automatic change . A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets .

(9) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6 .07 is “107 .” (10) Contact information . For further information regarding a change under this section, contact James Liechty at (202) 317-7005 (not a toll-free number) . .08 Tenant construction allowances . (1) Description of change and scope . (a) Applicability . This change applies to a taxpayer that wants to change its method of accounting for tenant construction allowances:

(i) from improperly treating the taxpayer as having a depreciable interest in the property subject to the tenant construction allowances for federal income tax purposes to properly treating the taxpayer as not having a depreciable interest in such property for federal income tax purposes; or

(ii) from improperly treating the taxpayer as not having a depreciable interest in the property subject to the tenant construction allowances for federal income tax purposes to properly treating the taxpayer as having a depreciable interest in such property for federal income tax purposes .

(b) Inapplicability . This change does not apply to:

(i) any tenant construction allowance that qualifies under § 110;

(ii) any portion of a tenant construction allowance that is not expended on depreciable property; or

(iii) any amount expended for depreciable property in excess of the tenant construction allowance .

(2) Definition . For purposes of this section 6 .08, the term “tenant construction allowance(s)” means any amount received by a lessee from a lessor to construct, acquire, or improve property for use by the lessee pursuant to a lease .

(3) Manner of making the change . A taxpayer changing its method of accounting under this section 6 .08 must submit the following information:

(a) If a lessee is filing the Form 3115, the lessee must submit a statement with

Bulletin No. 2025–24 1499 June 9, 2025

the Form 3115 that provides the amount of the tenant construction allowance received by the lessee, the amount of such tenant construction allowance expended by the lessee on property, and the name of the lessor that provided the tenant construction allowance.

(b) If a lessor is filing the Form 3115, the lessor must submit a statement with the Form 3115 that provides the amount of the tenant construction allowance provided to the lessee and the name of the lessee that received such tenant construction allowance.

(4) Reduced filing requirement for qualified small taxpayers . A qualified small taxpayer, as defined in section 6. 01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev. December 2022) to make this change in accordance with section 6. 08(3)(a) of this revenue procedure:

(a) The identification section of page 1 (above Part I);

(b) The signature section at the bottom of page 1;

(c) Part I; (d) Part II, all lines except lines 13, 15b, 16, 17, and 19; (e) Part IV, line 25; and (f) Schedule E. (5) No ruling on which party has the depreciable interest in the property sub- ject to tenant construction allowances . The consent granted under section 9 of Rev. Proc. 2015-13 for a change specified in this section 6. 08 is not a determination by the Commissioner that the taxpayer has properly determined that the taxpayer has, or does not have, a depreciable interest in the property subject to the tenant construction allowances for federal income tax purposes and does not create any presumption that the proposed determination of which party has the depreciable interest in such property is permissible. The director will ascertain whether the taxpayer’s determination of which party has the depreciable interest in the property subject to the tenant construction allowances is permissible.

(6) Concurrent automatic change . A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets.

(7) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6 .08 is “145 .” (8) Contact information . For further information regarding a change under this section, contact Elizabeth Binder at (202) 317-7005 (not a toll-free number) . .09 Safe harbor method of account- ing for determining the depreciation of certain tangible assets used by wireless telecommunications carriers under Rev. Proc. 2011-22 .

(1) Description of change . This change applies to a taxpayer that is within the scope of Rev . Proc . 2011-22, 2011-18 I .R .B . 737, and wants to change to the recovery periods described in section 5 of Rev . Proc . 2011-22 and any collateral change to the depreciation methods for all, or some of, the assets listed in that section .

(2) Reduced filing requirement for qualified small taxpayers . A qualified small taxpayer, as defined in section 6 .01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev . December 2022) to make this change:

(a) The identification section of page 1 (above Part I);

(b) The signature section at the bottom of page 1;

(c) Part I; (d) Part II, all lines except lines 13, 15b, 16, 17, and 19; (e) Part IV, all lines except line 25; and (f) Schedule E . (3) Concurrent automatic change . A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115 . If one or more of the changes in that single Form 3115 generate a negative § 481(a) adjustment and other changes in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment and a single positive § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment .

(4) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6 .09 is “157 .” (5) Contact information . For further information regarding a change under this section, contact Charles Magee at (202) 317-7005 (not a toll-free number) . .10 Partial dispositions of tangible depreciable assets to which the IRS’s adjustment pertains (§ 168; § 1.168(i)-8) .

(1) Description of change . (a) Applicability . This change applies to a taxpayer that is described in § 1 .168(i)-8(d)(2)(iii) and, pursuant to § 1 .168(i)-8(d)(2)(iii), that wants to make the partial disposition election specified in § 1 .168(i)-8(d)(2)(i) to the disposition of a portion of an asset to which the IRS’s adjustment (as described in § 1 .168(i)-8(d) (2)(iii)) pertains .

(b) Inapplicability . This change does not apply to:

(i) Any asset of which the disposed portion was a part that is not owned by the taxpayer at the beginning of the year of change; or

(ii) Any partial disposition election specified in § 1.168(i)-8(d)(2)(i) that is not made pursuant to § 1 .168(i)-8(d)(2)(iii) (for example, this change does not apply to the partial disposition election specified in § 1 .168(i)-8(d)(2)(i) that is made pursuant to § 1 .168(i)-8(d)(2)(iv)) .

(2) Change in method of accounting . The IRS will treat the making of the late election specified in section 6.10(1) of this revenue procedure as a change in method of accounting .

(3) Certain eligibility rules inappli- cable . The eligibility rules in sections 5 .01(1)(d) and (f) of Rev . Proc . 2015-13, 2015-5 I .R .B . 419, do not apply to this change .

(4) Manner of making change . (a) A qualified small taxpayer, as defined in section 6.01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev . December 2022) to make this change:

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I;

June 9, 2025 1500 Bulletin No. 2025–24

(iv) Part II, all lines except lines 13, 15b, 16, 17, and 19; (v) Part IV, all lines except line 25; and (vi) Schedule E. (b) A taxpayer (including a qualified small taxpayer) making this change must:

(i) Apply § 1. 168(i)-8(h)(1) and (3) (accounting for asset disposed of);

(ii) If the asset (as determined under § 1. 168(i)-8(c)(4)) of which the disposed portion is a part is properly included in one of the asset classes 00. 11 through 00. 4 of Rev. Proc. 87-56, 1987-2 C. B. 674, classify the replacement portion of such asset under the same asset class as the disposed portion of the asset in the taxable year in which the replacement portion is placed in service by the taxpayer;

(iii) If the taxpayer’s present method of accounting is not in accord with § 1. 168(i)-8(c)(4) (determination of asset disposed of), change to the appropriate asset as determined under § 1. 168(i)-8(c) (4);

(iv) If the taxpayer continues to deduct depreciation for the disposed portion of the asset (as determined under § 1. 168(i)-8(c) (4)) under the taxpayer’s present method of accounting, change from depreciating such disposed portion to recognizing gain or loss for the disposed portion or, if § 280B and § 1. 280B-1 apply to the disposition, change from depreciating such disposed portion to capitalizing the loss sustained on account of the demolition to the land on which the demolished structure was located; and

(v) If any asset is public utility property within the meaning of § 168(i)(10), attach a statement to its Form 3115 providing that the taxpayer agrees to the following additional terms and conditions:

(A) 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;

(B) 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; and

(C) 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.

(5) Concurrent automatic change . A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets. If the change for more than one asset included in that Form 3115 is specified in section 6.10(1) of this revenue procedure, the single Form 3115 should provide a single net § 481(a) adjustment for all such changes. If one or more of the changes specified in section 6.10(1) of this revenue procedure in that single Form 3115 generate a negative § 481(a) adjustment and other changes specified in section 6. 10(1) of this revenue procedure in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all such changes that are included in that Form 3115 generating such negative adjustment and a single positive § 481(a) adjustment for all such changes that are included in that Form 3115 generating such positive adjustment.

(6) Designated automatic accounting method change number . The designated automatic accounting method change number for a change to the method of accounting under this section 6. 10 is “198. ”

(7) Contact information . For further information regarding a change under this section, contact Patrick Clinton at (202) 317-7005 (not a toll-free number). . 11 Depreciation of leasehold improve- ments (§§ 167, 168, and 197; § 1.167(a)- 4) . (1) Description of change . This change, as described in Rev. Proc. 2014-17, 201412 I. R. B. 661, applies to a taxpayer that wants to change its method of accounting to comply with § 1. 167(a)-4 for leasehold improvements in which the taxpayer has a depreciable interest at the beginning of the year of change:

(a) From improperly depreciating the leasehold improvements to which § 168 applies over the term of the lease (including renewals, if applicable) to properly depreciating these improvements under § 168;

(b) From improperly amortizing leasehold improvements to which § 197 applies over the term of the lease (including renewals, if applicable) to properly amortizing these improvements under § 197; or

(c) From improperly amortizing leasehold improvements to which § 167(f)(1) applies over the term of the lease (including renewals, if applicable) to properly amortizing these improvements under § 167(f)(1).

(2) Certain eligibility rule inapplica- ble . The eligibility rule in section 5. 01(1) (d) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, does not apply to a taxpayer making this change.

(3) Manner of making change . (a) A qualified small taxpayer, as defined in section 6.01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev. December 2022) to make this change:

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I; (iv) Part II, all lines except lines 13, 15b, 16, 17, and 19; (v) Part IV, all lines except line 25; and (vi) Schedule E. (b) If any leasehold improvement is public utility property within the meaning of § 168(i)(10) or former § 167(l)(3)(A), a taxpayer (including a qualified small taxpayer) making this change must attach to its Form 3115 a statement providing that the taxpayer agrees to the following additional terms and conditions:

(i) A normalization method of accounting (within the meaning of § 168(i)(9) or former § 167(l)(3)(G)) will be used for the public utility property subject to the change;

(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 change; and

(iii) Within 30 calendar days of filing the federal income tax return for the year of change, the taxpayer will provide a

Bulletin No. 2025–24 1501 June 9, 2025

copy of the completed Form 3115 to any regulatory body having jurisdiction over the public utility property subject to the change.

(4) Concurrent automatic change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115. If one or more of the changes in that single Form 3115 generate a negative § 481(a) adjustment and other changes in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment and a single positive § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment.

(b) A taxpayer making both this change and a change to a UNICAP method under section 12. 01, 12. 02, 12. 08, or 12. 12 of this revenue procedure (as applicable) for the same year of change should file a single Form 3115 for all such changes and must enter the designated automatic accounting method change numbers for the 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. For example, a qualified small taxpayer must include on the single Form 3115 the information required by section 6. 11(3)(a) of this revenue procedure for this change and the information required by the lines on Form 3115 applicable to the UNICAP method change, including Part II lines 14 and 15, Part IV, and Schedule D, and must include a separate response to each line on Form 3115 that is applicable to both changes (such as Part II lines 6b, 7, 8b, 14, and, as applicable for this change, Part IV) for which the taxpayer’s response is different for this change and the change to a UNICAP method.

(5) Designated automatic account- ing method change number . The designated automatic accounting method change number for a change to a method of accounting under this section 6. 11 is “199. ”

(6) Contact information . For further information regarding a change under this section, contact Patrick Clinton at (202) 317-7005 (not a toll-free number). . 12 Permissible to permissible method of accounting for depreciation of MACRS property (§ 168; §§ 1.168(i)-1, 1.168(i)-7, and 1.168(i)-8) .

(1) Description of change . (a) Applicability . This change, as described in Rev. Proc. 2014-54, 2014-41 I. R. B. 675, applies to a taxpayer that wants to make a change in method of accounting for depreciation that is specified in section 6. 12(3) of this revenue procedure for an asset:

(i) to which § 168 applies (MACRS property);

(ii) for which the present and proposed methods of accounting are permissible methods of accounting under § 1. 168(i)-1, § 1. 168(i)-7, or § 1. 168(i)-8, as applicable; and

(iii) that is owned by the taxpayer at the beginning of the year of change.

(b) Inapplicability . This change does not apply to any property that is not depreciated under § 168 under the taxpayer’s present and proposed methods of accounting.

(2) Certain eligibility rule inapplica- ble . The eligibility rule in section 5. 01(1) (d) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, does not apply to a taxpayer making this change.

(3) Changes covered . This section 6. 12 only applies to the following changes in methods of accounting for depreciation of MACRS property:

(a) For the items of MACRS property not subject to a general asset account election under § 168(i)(4) and the regulations thereunder—

(i) a change from single asset accounts (or item accounts) for specific items of MACRS property to multiple asset accounts (or pools) for the same assets, or vice versa, in accordance with § 1. 168(i)-7;

(ii) a change from grouping specific items of MACRS property in multiple asset accounts to a different grouping of the same assets in multiple asset accounts in accordance with § 1. 168(i)-7(c);

(iii) a change in the method of identifying which assets in multiple asset accounts or which portions of assets have been disposed of by the taxpayer

from the specific identification method under § 1.168(i)-8(g)(1) to the first-in, first-out (FIFO) method of accounting under § 1. 168(i)-8(g)(2)(i) or the modified FIFO method of accounting under § 1. 168(i)-8(g)(2)(ii);

(iv) a change in the method of identifying which assets in multiple asset accounts or which portions of assets have been disposed of by the taxpayer from the FIFO method of accounting under § 1. 168(i)-8(g)(2)(i) or the modified FIFO method of accounting under § 1.168(i)-8(g)(2)(ii) to the specific identification method under § 1.168(i)-8(g)(1);

(v) a change in the method of identifying which assets in multiple asset accounts or which portions of assets have been disposed of by the taxpayer from the FIFO method of accounting under § 1. 168(i)-8(g)(2)(i) to the modified FIFO method of accounting under § 1. 168(i)-8(g)(2)(ii), or vice versa ;

(vi) a change in the method of identifying which mass assets (as defined in § 1. 168(i)-8(b)(3)) in multiple asset accounts or which portions of mass assets have been disposed of by the taxpayer from the specific identification method under § 1. 168(i)-8(g)(1) to a mortality dispersion table in accordance with § 1. 168(i)-8(g)(2)(iii);

(vii) a change in the method of identifying which mass assets (as defined in § 1. 168(i)-8(b)(3)) in multiple asset accounts or which portions of mass assets have been disposed of by the taxpayer from the FIFO method of accounting under § 1. 168(i)-8(g)(2)(i) or the modified FIFO method of accounting under § 1. 168(i)-8(g)(2)(ii) to a mortality dispersion table in accordance with § 1. 168(i)-8(g)(2)(iii);

(viii) a change in the method of identifying which mass assets (as defined in § 1. 168(i)-8(b)(3)) in multiple asset accounts or which portions of mass assets have been disposed of by the taxpayer from a mortality dispersion table in accordance with § 1. 168(i)-8(g)(2)(iii) to the specific identification method under § 1. 168(i)-8(g)(1), the FIFO method of accounting under § 1. 168(i)-8(g)(2)(i), or the modified FIFO method of accounting under § 1. 168(i)-8(g)(2)(ii);

(ix) if § 1. 168(i)-8(f)(2) applies (disposition of an asset in a multiple asset

June 9, 2025 1502 Bulletin No. 2025–24

account) and it is impracticable from the taxpayer’s records to determine the unadjusted depreciable basis of the asset disposed of, a change in the method of determining the unadjusted depreciable basis of all assets in the same multiple asset account from one reasonable method to another reasonable method; or

(x) if § 1. 168(i)-8(f)(3) applies (disposition of a portion of an asset) and it is impracticable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed portion of the asset, a change in the method of determining the unadjusted depreciable basis of all disposed portions of the asset from one reasonable method to another reasonable method; and

(b) For the items of MACRS property subject to a general asset account election under § 168(i)(4) and the regulations thereunder—

(i) a change from grouping specific items of MACRS property in general asset accounts to a different grouping of the same assets in general asset accounts in accordance with § 1. 168(i)-1(c);

(ii) a change in the method of identifying which assets or which portions of assets have been disposed of by the taxpayer from the specific identification method under § 1. 168(i)-1(j)(2)(i) (A) to the FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(B) or the modified FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(C);

(iii) a change in the method of identifying which assets or which portions of assets have been disposed of by the taxpayer from the FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(B) or the modified FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(C) to the specific identification method under § 1. 168(i)-1(j)(2)(i)(A);

(iv) a change in the method of identifying which assets or which portions of assets have been disposed of by the taxpayer from the FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(B) to the modified FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(C), or vice versa ;

(v) a change in the method of identifying which mass assets (as defined in § 1. 168(i)-1(b)(6)) or which portions of mass assets that are in a separate general

asset account in accordance with § 1. 1681(c)(2)(ii)(H), have been disposed of by the taxpayer from the specific identification method under § 1. 168(i)-1(j)(2)(i)(A) to a mortality dispersion table in accordance with § 1. 168(i)-1(j)(2)(i)(D);

(vi) a change in the method of identifying which mass assets (as defined in § 1. 168(i)-1(b)(6)) or which portions of mass assets that are in a separate general asset account in accordance with § 1. 1681(c)(2)(ii)(H), have been disposed of by the taxpayer from the FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(B) or the modified FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(C) to a mortality dispersion table in accordance with § 1. 168(i)-1(j)(2)(i)(D);

(vii) a change in the method of identifying which mass assets (as defined in § 1. 168(i)-1(b)(6)), or which portions of mass assets that are in a separate general asset account in accordance with § 1. 1681(c)(2)(ii)(H), have been disposed of by the taxpayer from a mortality dispersion table in accordance with § 1. 168(i)-1(j) (2)(i)(D) to the specific identification method under § 1. 168(i)-1(j)(2)(i)(A), the FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(B), or the modified FIFO method of accounting under § 1. 168(i)-1(j)(2)(i)(C); or

(viii) if § 1. 168(i)-1(j)(3) applies (basis of a disposed asset or a disposed portion of an asset in a general asset account) and it is impracticable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed asset or the disposed portion of the asset, a change in the method of determining the unadjusted depreciable basis of all assets in the same general asset account from one reasonable method to another reasonable method.

(4) Manner of making change . (a) The changes in methods of accounting specified in section 6.12(3)(a)(i) and (ii) and section 6. 12(3)(b)(i) of this revenue procedure are 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.

(i) If the change specified in section 6. 12(3)(a)(i) of this revenue procedure is a change to a single asset account, the

new single asset account must include a beginning balance for both the unadjusted depreciable basis and the depreciation reserve of the asset included in that single asset account.

(ii) If the change specified in section 6. 12(3)(a)(i) or (ii) of this revenue procedure is a change to a multiple asset account (either a new one or a different grouping), the multiple asset account must include a beginning balance for both the unadjusted depreciable basis and the depreciation reserve. The beginning balance for the unadjusted depreciable basis of each multiple 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 multiple asset account. The beginning balance of the depreciation reserve of each multiple 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 multiple asset account.

(iii) The change specified in section 6. 12(3)(b)(i) of this revenue procedure requires the 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.

(b) The changes in methods of accounting specified in section 6.12(3)(a)(iii), (vi), (ix), and (x) and section 6. 12(3)(b) (ii), (v), and (viii) of this revenue procedure are made using a cut-off method and apply to dispositions occurring on or after the beginning of the year of change.

(c) Even though the changes in methods of accounting specified in section 6. 12(3)(a)(iv), (v), (vii), and (viii) and section 6. 12(3)(b)(iii), (iv), (vi), and (vii) of this revenue procedure are changes from one permissible method of accounting to another permissible

Bulletin No. 2025–24 1503 June 9, 2025

method of accounting, these changes are made with a § 481(a) adjustment. However, see section 6. 12(4)(f) of this revenue procedure for an exception. For the changes in methods of accounting specified in section 6.12(3)(b)(iii), (iv), (vi), and (vii) of this revenue procedure, the § 481(a) adjustment should be zero unless § 1. 168(i)-1(e)(3) applies to the asset subject to the change.

(d) A qualified small taxpayer, as defined in section 6.01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev. December 2022) to make this change:

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I; (iv) Part II, all lines except lines 13, 15b, 16, 17, and 19 if the qualified small taxpayer is not making a change in method of accounting specified in section 6.12(3) (a)(ix) and (x) and section 6. 12(3)(b)(viii) of this revenue procedure;

(v) Part II, all lines except lines 13, 15b, 16c, 17, and 19 if the qualified small taxpayer is making a change in method of accounting specified in section 6.12(3) (a)(ix) or (x) or section 6. 12(3)(b)(viii) of this revenue procedure;

(vi) Part IV; and (vii) Schedule E. (e) If any asset subject to this change is public utility property within the meaning of § 168(i)(10), a taxpayer (including a qualified small taxpayer) making this change must attach to its Form 3115 a statement providing that the taxpayer agrees 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 change;

(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 a change in method of accounting specified in section 6.12(3)(a)(iv), (v), (vii), or (viii) or section 6. 12(3)(b)(iii), (iv), (vi),

or (vii) of this revenue procedure made for the public utility property subject to the change; 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 change.

(f) A taxpayer that met the scope requirements of section 4 of Rev. Proc. 2015-20, 2015-9 I. R. B. 694, and that changed its method of accounting under section 6. 37(3)(a)(iv), (a)(v), (a)(vii), or (a)(viii) of Rev. Proc. 2015-14 (which is now section 6. 12(3)(a)(iv), (a)(v), (a) (vii), or (a)(viii) of this revenue procedure) by following section 5 of Rev. Proc. 2015-20 is required to calculate a § 481(a) adjustment as of the first day of the year of change that takes into account only dispositions in taxable years beginning on or after January 1, 2014.

(5) No audit protection . A taxpayer calculating a § 481(a) adjustment under section 6. 12(4)(f) of this revenue procedure that takes into account only dispositions in taxable years beginning on or after January 1, 2014, does not receive audit protection under section 8. 01 of Rev. Proc. 2015-13 for dispositions subject to a change under section 6. 12(3)(a) (iv), (a)(v), (a)(vii), or (a)(viii) of this revenue procedure in taxable years beginning before January 1, 2014. See section 5. 03 of Rev. Proc. 2015-20.

(6) Concurrent change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets. If the change for more than one asset included in that Form 3115 is specified in section 6.12(3)(a)(iv), (v), (vii), or (viii) or section 6. 12(3)(b)(iii), (iv), (vi), or (vii) of this revenue procedure, the single Form 3115 also should provide a single net § 481(a) adjustment for all such changes. If one or more changes specified in section 6. 12(3)(a)(iv), (v), (vii), or (viii) or section 6. 12(3)(b)(iii), (iv), (vi), or (vii) of this revenue procedure in that single Form 3115 generate a negative § 481(a) adjustment and other changes specified in section 6. 12(3)(a)(iv), (v), (vii), or (viii) or section 6. 12(3)(b)(iii), (iv), (vi), or (vii) of this revenue procedure in that same Form

3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all such changes that are included in that Form 3115 generating such negative adjustment and a single positive § 481(a) adjustment for all such changes that are included in that Form 3115 generating such positive adjustment.

(b) A taxpayer making this change and any change listed in section 6. 12(6)(b) (i)-(iv) of this revenue procedure for the same year of change should file a single Form 3115 for all such changes and must enter the designated automatic accounting method change numbers for the changes on the appropriate line on the Form 3115. See section 6. 03(1)(b) of Rev. Proc. 201513 for information on making concurrent changes. For example, a qualified small taxpayer must include on the single Form 3115 the information required to be completed on Form 3115 by a qualified small taxpayer under this revenue procedure for each change in method of accounting included on that Form 3115. The listed changes are:

(i) A change under section 6. 01 of this revenue procedure;

(ii) A change under section 6. 13 of this revenue procedure;

(iii) A change under section 6. 14 of this revenue procedure;

(iv) A change under section 6. 15 of this revenue procedure; and

(v) A change under section 11. 07(3)(c) of this revenue procedure.

(7) Designated automatic account- ing method change number . The designated automatic accounting method change number for a change to a method of accounting under this section 6. 12 is “200. ”

(8) Contact information . For further information regarding a change under this section, contact Patrick Clinton at (202) 317-7005 (not a toll-free number). . 13 Disposition of a building or struc- tural component (§ 168; § 1.168(i)-8)

(1) Description of change . (a) Applicability . This change, as described in Rev. Proc. 2014-54, 201441 I. R. B. 675, applies to a taxpayer that wants to make a change in method of accounting that is specified in section 6. 13(3) of this revenue procedure for disposing of a building or a structural

June 9, 2025 1504 Bulletin No. 2025–24

component or disposing of a portion of a building (including its structural components) to which the partial disposition rule in § 1. 168(i)-8(d)(1) applies. These specified changes are consistent with §§ 1. 168(i)-8(b)(2), 1. 168(i)-8(c)(4) (ii)(A), (B), and (D), 1. 168(i)-8(f), and

1. 168(i)-8(g), as applicable. This change also affects the determination of gain or loss from disposing of the building, the structural component, or the portion of the building (including its structural components) and may affect whether the taxpayer must capitalize amounts paid to restore a unit of property (as determined under § 1. 263(a)-3(e) or (f)) under § 1. 263(a)-3(k).

(b) Inapplicability . This change does not apply to the following:

(i) Any asset (as determined under § 1. 168(i)-8(c)(4)) that is not depreciated under § 168 under the taxpayer’s present method of accounting and, if applicable, under the taxpayer’s proposed method of accounting;

(ii) Any asset subject to a general asset account election under § 168(i)(4) and the regulations thereunder (but see section 6. 15 of this revenue procedure for making a change in method of accounting for dispositions of tangible depreciable assets subject to a general asset account election);

(iii) Any multiple buildings, condominium units, or cooperative units that are treated as a single building under the taxpayer’s present method of accounting, or will be treated as a single building under the taxpayer’s proposed method of accounting, pursuant to § 1. 1250-1(a)(2) (ii);

(iv) Any disposition of a portion of an asset in a transaction described in the last sentence in § 1. 168(i)-8(d)(1) for which the taxpayer did not make a partial disposition election in accordance with § 1. 168(i)-8(d)(2)(ii), (iii), or (iv), as applicable (but see section 6. 10 of this revenue procedure for making a partial disposition election pursuant to § 1. 168(i)-8(d) (2)(iii)); or

(v) Any demolition of a structure to which § 280B and § 1. 280B-1 apply.

(2) Certain eligibility rule inapplica- ble . The eligibility rule in section 5. 01(1) (d) of Rev. Proc. 2015-13, 2015-5 I. R. B.

419, does not apply to a taxpayer making this change.

(3) Covered changes . This section 6. 13 only applies to the following changes in methods of accounting for a building (including its structural components), condominium unit (including its structural components), cooperative unit (including its structural components), or an improvement or addition (including its structural components) thereto:

(a) For purposes of applying § 1. 168(i)-8(c)(4) (determination of asset disposed of), a change to the appropriate asset as determined under § 1. 168(i)-8(c) (4)(ii)(A), (B), or (D), as applicable;

(b) If the taxpayer makes the change specified in section 6.13(3)(a) of this revenue procedure, and if the taxpayer disposed of the asset as determined under section 6. 13(3)(a) of this revenue procedure in a taxable year prior to the year of change (including the taxable year immediately preceding the year of change) but under its present method of accounting continues to deduct depreciation for such disposed asset, a change from depreciating the disposed asset to recognizing gain or loss upon disposition or, if § 280B and § 1. 280B-1 apply to the disposition, change from depreciating such disposed asset to capitalizing the loss sustained on account of the demolition to the land on which the demolished structure was located;

(c) If the taxpayer makes the change specified in section 6.13(3)(a) of this revenue procedure, and if the taxpayer disposed of a portion of the asset as determined under section 6. 13(3)(a) of this revenue procedure in a transaction described in the first sentence in § 1. 168(i)-8(d)(1) in a taxable year prior to the year of change (including the taxable year immediately preceding the year of change) but under its present method of accounting continues to deduct depreciation for such disposed portion, a change from depreciating the disposed portion to recognizing gain or loss upon disposition or, if § 280B and § 1. 280B-1 apply to the disposition, change from depreciating such disposed portion to capitalizing the loss sustained on account of the demolition to the land on which the demolished structure was located;

(d) If the taxpayer’s present method of accounting for its buildings (including their structural components), condominium units (including their structural components), cooperative units (including their structural components), and improvements or additions (including its structural components) thereto that are depreciated under § 168 is in accord with § 1. 168(i)-8(c)(4)(ii)(A), (B), and (D), and if the taxpayer disposed of an asset as determined under § 1. 168(i)-8(c)(4)(ii) (A), (B), or (D), as applicable, in a taxable year prior to the year of change (including the taxable year immediately preceding the year of change) but under its present method of accounting continues to deduct depreciation for such disposed asset, a change from depreciating the disposed asset to recognizing gain or loss upon disposition or, if § 280B and § 1. 280B-1 apply to the disposition, change from depreciating such disposed asset to capitalizing the loss sustained on account of the demolition to the land on which the demolished structure was located;

(e) If the taxpayer’s present method of accounting for its buildings (including their structural components), condominium units (including their structural components), cooperative units (including their structural components), and improvements or additions (including its structural components) thereto that are depreciated under § 168 is in accord with § 1. 168(i)-8(c)(4)(ii)(A), (B), and (D), and if the taxpayer disposed of a portion of an asset as determined under § 1. 168(i)-8(c) (4)(ii)(A), (B), or (D), as applicable, in a transaction described in the first sentence in § 1. 168(i)-8(d)(1) in a taxable year prior to the year of change (including the taxable year immediately preceding the year of change) but under its present method of accounting continues to deduct depreciation for such disposed portion, a change from depreciating the disposed portion to recognizing gain or loss upon disposition or, if § 280B and § 1. 280B-1 apply to the disposition, change from depreciating such disposed portion to capitalizing the loss sustained on account of the demolition to the land on which the demolished structure was located;

(f) A change in the method of identifying which assets in multiple asset accounts

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or which portions of assets have been disposed of from a method of accounting not specified in § 1.168(i)-8(g)(1) or (2) (i), (ii), or (iii) (for example, the last-in, first-out (LIFO) method of accounting) to a method of accounting specified in § 1. 168(i)-8(g)(1) or (2)(i), (ii), or (iii), as applicable;

(g) If § 1. 168(i)-8(f)(2) applies (disposition of an asset in a multiple asset account) and it is practicable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed asset, a change in the method of determining the unadjusted depreciable basis of the disposed asset from a method of not using the taxpayer’s records to a method of using the taxpayer’s records;

(h) If § 1. 168(i)-8(f)(2) applies (disposition of an asset in a multiple asset account) and it is impracticable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed asset, a change in the method of determining the unadjusted depreciable basis of all assets in the same multiple asset account from an unreasonable method (for example, discounting the cost of the replacement asset to its placed-in-service year cost using the Consumer Price Index) to a reasonable method;

(i) If § 1. 168(i)-8(f)(3) applies (disposition of a portion of an asset) and it is practicable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed portion of the asset, a change in the method of determining the unadjusted depreciable basis of the disposed portion of the asset from a method of not using the taxpayer’s records to a method of using the taxpayer’s records;

(j) If § 1. 168(i)-8(f)(3) applies (disposition of a portion of an asset) and it is impracticable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed portion of the asset, a change in the method of determining the unadjusted depreciable basis of the disposed portion of the asset from an unreasonable method (for example, discounting the cost of the replacement portion of the asset to its placed-in-service year cost using the Consumer Price Index) to a reasonable method; or

(k) A change from recognizing gain or loss under § 1. 168(i)-8T upon the dis

position of an asset (as determined under § 1. 168(i)-8(c)(4)(ii)(A), (B), or (D), as applicable) included in a general asset account to recognizing gain or loss upon the disposition of the same asset under § 1. 168(i)-8 if: (A) the taxpayer made the change specified in section 6.11 of Rev. Proc. 2016-29, 2016-21 I. R. B. 880, section 6. 34 of Rev. Proc. 2015-14, 2015-5 I. R. B. 450, or section 6. 34 of the APPENDIX to Rev. Proc. 2011-14, 2011-4 I. R. B. 330, as clarified and modified by Rev. Proc. 201239, 2012-41 I. R. B. 470, Rev. Proc. 201417, 2014-12 I. R. B. 661, and Rev. Proc. 2014-54, 2014-41 I. R. B. 675 (revocation of a general asset account election); (B) the taxpayer made a qualifying disposition election under § 1. 168(i)-1T(e)(3)(iii) in a taxable year prior to the year of change for the disposition of such asset; (C) the taxpayer’s present method of accounting for such asset is in accord with § 1. 168(i)-8(c) (4)(ii)(A), (B), or (D), as applicable; and (D) the taxpayer recognized a gain or loss under § 1. 168(i)-8T upon the disposition of such asset in a taxable year prior to the year of change.

(4) Examples . The following examples illustrate the covered changes specified in section 6. 13(3) of this revenue procedure.

(a) Example 1 . X, a calendar-year taxpayer, acquired and placed in service a building and its structural components in 2000. In 2005, X constructed and placed in service an addition to this building. X depreciates the building, the addition, and their structural components under § 168. A change by X to treat the original building (including its structural components) as an asset and the addition to the building (including the structural components of such addition) as a separate asset for disposition purposes is a change described in section 6. 13(3)(a) of this revenue procedure solely for purposes of § 1. 168(i)-8(c)(4).

(b) Example 2 . Y, a calendar year taxpayer, acquired and placed in service a building and its structural components in 1990. Y depreciates this building and its structural components under § 168. In 2000, a tornado damaged the roof and, as a result, Y replaced the entire roof of the building. Y did not recognize a loss on the retirement of the original roof and continues to depreciate the original roof. Y also capitalized the cost of the replacement roof and has been depreciating this roof under § 168 since 2000. Because the original roof was disposed of as a result of a casualty event described in § 165, a change by Y from depreciating the original roof to recognizing a loss upon its retirement is a covered change described in section 6. 13(3)(e) of this revenue procedure solely for purposes of § 1. 168(i)-8.

(c) Example 3 . The facts are the same as in Example 2, except a tornado did not occur, but Y

still replaced the entire roof of the building in 2000. Because the original roof was not disposed of as a result of any of the events described in the first sentence in § 1. 168(i)-8(d)(1) that require a partial disposition, a partial disposition election must be made to change from depreciating the original roof to recognizing a loss upon its retirement. Pursuant to section 6. 13(1)(b)(iv) of this revenue procedure, section 6. 13 does not apply to the disposition of the original roof in 2000.

(5) Manner of making change . (a) A taxpayer (including a qualified small taxpayer as defined in section 6. 01(4)(b) of this revenue procedure) making this change must attach to its Form 3115 a statement with the following: (i) A description of the assets to which this change applies;

(ii) If the taxpayer is making a change specified in section 6.13(3)(a) of this revenue procedure, a description of the assets for disposition purposes under the taxpayer’s present and proposed methods of accounting;

(iii) If the taxpayer is making the change specified in section 6.13(3)(f) of this revenue procedure, a description of the methods of identifying which assets have been disposed of under the taxpayer’s present and proposed methods of accounting;

(iv) If the taxpayer is making the change specified in section 6.13(3)(h) or (j) of this revenue procedure, a description of the methods of determining the unadjusted depreciable basis of the disposed asset or disposed portion of the asset, as applicable, under the taxpayer’s present and proposed methods of accounting; and

(v) If any asset is public utility property within the meaning of § 168(i)(10), a statement providing that the taxpayer agrees to the following additional terms and conditions:

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

(B) 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 application; and

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(C) 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 application to any regulatory body having jurisdiction over the public utility property subject to the application.

(b) A qualified small taxpayer, as defined in section 6.01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev. December 2022) to make this change:

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I; (iv) Part II, all lines except lines 13, 15b, 16, 17, and 19 if the qualified small taxpayer is not making a change in method of accounting specified in section 6.13(3) (h) and (j) of this revenue procedure;

(v) Part II, all lines except lines 13, 15b, 16c, 17, and 19 if the qualified small taxpayer is making a change in method of accounting specified in section 6.13(3)(h) or (j) of this revenue procedure;

(vi) Part IV, all lines except line 25; and

(vii) Schedule E. (6) No ruling on asset . The consent granted under section 9 of Rev. Proc. 2015-13 for a change specified in section 6. 13(3)(a) of this revenue procedure is not a determination by the Commissioner that the taxpayer is using the appropriate asset under § 1. 168(i)-8(c)(4) for determining what asset is disposed of by the taxpayer and does not create any presumption that the proposed asset is permissible under § 1. 168(i)-8(c)(4). The director will ascertain whether the taxpayer’s determination of its asset under § 1. 168(i)-8(c)(4) is permissible.

(7) Section 481(a) adjustment . (a) A taxpayer changing its method of accounting under this section 6. 13 may use statistical sampling in determining the § 481(a) adjustment by following the guidance provided in Rev. Proc. 2011-42, 2011-37 I. R. B. 318. (b) A taxpayer that met the scope requirements of section 4 of Rev. Proc. 2015-20, 2015-9 I. R. B. 694, and that changed its method of accounting under section 6. 38 of Rev. Proc. 2015-14 (which

is now this section 6 .13) by following section 5 of Rev . Proc . 2015-20 is required to calculate a section § 481(a) adjustment as of the first day of the year of change that takes into account only dispositions in taxable years beginning on or after January 1, 2014 .

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

(i) If the taxpayer is making the change specified in section 6.13(3)(a) of this revenue procedure and if the taxpayer recognized a gain or loss under § 1 .168(i)-8T on the disposition of the asset (or if applicable, a portion thereof) in a taxable year prior to the year of change;

(ii) If the taxpayer is making the change specified in section 6.13(3)(k) of this revenue procedure; or

(iii) If the taxpayer is a qualified taxpayer as defined in section 4.01 of Rev. Proc . 2015-56, 2015-49 I .R .B . 827, and that is within the scope of section 3 of Rev . Proc . 2015-56, and is making the change specified in section 5.02(5)(b) of Rev. Proc. 2015-56 on or before the first taxable year that the qualified taxpayer uses the remodel-refresh safe harbor provided in section 5 .02 of Rev . Proc . 2015-56 .

(b) If section 6 .13(8)(a) of this revenue procedure does not apply, see section 7 .03 of Rev . Proc . 2015-13 for the § 481(a) adjustment period .

(c) Example . (i) Y, a fiscal year taxpayer with a taxable year beginning December 1 and ending November 30, acquired and placed in service a building and its structural components in 2000 . Y depreciates this building and its structural components under § 168 . The roof is a structural component of the building . Y replaced the entire roof in June 2010 . On its federal tax return for the taxable year ended November 30, 2010, Y did not recognize a loss on the retirement of the original roof and continues to depreciate the original roof . Y also capitalized the cost of the replacement roof and has been depreciating this roof under § 168 since June 2010 . The adjusted depreciable basis of the original roof at the time of its retirement in 2010 (taking into account the applicable convention) is $11,000, and Y claimed depreciation of $1,000 for such roof after its retirement (taking into account the applicable convention) and before the taxable year ended November 30, 2013 (2012 taxable year) . Also the 12-month allowable depreciation deduction for the original roof is $500 for the 2012 taxable year, $500 for the taxable year ended November 30, 2014 (2013 taxable year), and $500 for the taxable year ended November 30, 2015 (2014 taxable year) .

(ii) In accordance with § 1 .168(i)-8T(c)(4)(ii) (A) and (B) and section 6 .29(3)(a) and (b) of the APPENDIX to Rev. Proc. 2011-14, as modified by Rev. Proc. 2012-20, 2012-14 I.R.B. 700, Y filed with its federal income tax return for the taxable year ended November 30, 2013, a Form 3115 to treat the building as an asset and each structural component of the building as a separate asset for disposition purposes and also to change from depreciating the original roof to recognizing a loss upon its retirement . The amount of the net negative § 481(a) adjustment on this Form 3115 is $10,000 (adjusted depreciable basis of $11,000 for the original roof at the time of its retirement (taking into account the applicable convention) less depreciation of $1,000 claimed for such roof after its retirement (taking into account the applicable convention) and before the 2012 taxable year) .

(iii) Y complies with § 1 .168(i)-8 beginning with its taxable year ended November 30, 2016 (2015 taxable year) . For Y’s 2015 taxable year, the late partial disposition election under section 6 .10 of Rev . Proc . 2016-29 does not apply . Y also decides not to file a private letter ruling requesting an extension of time under § 301 .9100-3 of the Procedure and Administration Regulations to make a partial disposition election for the original roof . In accordance with section 6 .13(3)(a) of this revenue procedure, Y files a Form 3115 with its federal income tax return for the 2015 taxable year to change to treating the original building (including its original roof and other original structural components) as an asset and the replacement roof as a separate asset for disposition purposes . Because the late partial disposition election under section 6 .10 of Rev . Proc . 2016-29 does not apply for Y’s 2015 taxable year and Y did not receive a private letter ruling granting an extension of time under § 301 .9100-3 to make a partial disposition election for the original roof, Y does not recognize the net loss of $10,000 upon the retirement of the original roof under § 1 .168(i)-8 and Y will continue to depreciate the original roof . Thus, the net positive § 481(a) adjustment for this change is $8,500 (net loss of $10,000 claimed on the 2012 return for the retirement of the original roof less depreciation of $1,500 for the original roof for the 2012, 2013, and 2014 taxable years) and is included in Y’s taxable income for the 2015 taxable year .

(9) No audit protection . A taxpayer calculating a § 481(a) adjustment under section 6 .13(7)(b) of this revenue procedure that takes into account only dispositions in taxable years beginning on or after January 1, 2014, does not receive audit protection under section 8 .01 of Rev . Proc . 2015-13 for dispositions subject to a change under this section 6 .13 in taxable years beginning before January 1, 2014 . See section 5 .04 of Rev . Proc . 2015-20 . (10) Concurrent automatic change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for

Bulletin No. 2025–24 1507 June 9, 2025

all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115. If one or more of the changes in that single Form 3115 generate a negative § 481(a) adjustment and other changes in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all the changes that are included in that Form 3115 generating such negative adjustment and a single positive § 481(a) adjustment for all the changes that are included in that Form 3115 generating such positive adjustment.

(b) A taxpayer making this change and any change listed in section 6. 13(10) (b)(i)-(iv) of this revenue procedure for the same year of change should file a single Form 3115 for all of such changes and must enter the designated automatic accounting method change numbers for the 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. For example, a qualified small taxpayer must include on the single Form 3115 the information required to be completed on Form 3115 by a qualified small taxpayer under this revenue procedure for each change in method of accounting included on that Form 3115. The listed changes are:

(i) A change under section 6. 01 of this revenue procedure;

(ii) A change under section 6. 12 of this revenue procedure;

(iii) A change under section 6. 14 of this revenue procedure; and

(iv) A change under section 6. 15 of this revenue procedure.

(11) Designated automatic accounting method change number . The designated automatic accounting method change number for a change to the method of accounting under this section 6. 13 is “205. ”

(12) Contact information . For further information regarding a change under this section, contact Patrick Clinton at (202) 317-7005 (not a toll-free number). . 14 Dispositions of tangible depre- ciable assets (other than a building or its structural components) (§ 168; § 1.168(i)-8) .

(1) Description of change .

(a) Applicability . This change, as described in Rev. Proc. 2014-54, 201441 I. R. B. 675, applies to a taxpayer that wants to make a change in method of accounting that is specified in section 6. 14(3) of this revenue procedure for disposing of § 1245 property or a depreciable land improvement or disposing of a portion of § 1245 property or a depreciable land improvement to which the partial disposition rule in § 1. 168(i)-8(d)(1) applies. These specified changes are consistent with §§ 1. 168(i)-8(c)(4)(i), 1. 168(i)-8(c) (4)(ii)(C) and (D), 1. 168(i)-8(f), and

1. 168(i)-8(g), as applicable. This change also affects the determination of gain or loss from disposing of the § 1245 property, the depreciable land improvement, or a portion of the § 1245 property or depreciable land improvement, and may affect whether the taxpayer must capitalize amounts paid to restore a unit of property (as determined under § 1. 263(a)-3(e) or (f)) under § 1. 263(a)-3(k).

(b) Inapplicability . This change does not apply to the following:

(i) Any asset (as determined under § 1. 168(i)-8(c)(4)) that is not depreciated under § 168 under the taxpayer’s present method of accounting and, if applicable, under the taxpayer’s proposed method of accounting;

(ii) Any building (including its structural components), condominium unit (including its structural components), cooperative unit (including its structural components), or an improvement or addition (including its structural components) thereto (but see section 6. 13 of this revenue procedure for making this change);

(iii) Any asset subject to a general asset account election under § 168(i)(4) and the regulations thereunder (but see section 6. 15 of this revenue procedure for making a change for dispositions of tangible depreciable assets subject to a general asset account election); or

(iv) Any disposition of a portion of an asset in a transaction described in the last sentence in § 1. 168(i)-8(d)(1) for which the taxpayer did not make a partial disposition election in accordance with § 1. 168(i)-8(d)(2)(ii), (iii), or (iv), as applicable (but see section 6. 10 of this revenue procedure for making a partial disposition election pursuant to § 1. 168(i)-8(d) (2)(iii)).

(2) Certain eligibility rule inapplica- ble . The eligibility rule in section 5. 01(1) (d) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, does not apply to a taxpayer making this change.

(3) Covered changes . This section 6. 14 only applies to the following changes in methods of accounting for a § 1245 property, a depreciable land improvement, or an improvement or addition thereto:

(a) For purposes of applying § 1. 168(i)-8(c)(4) (determination of asset disposed of), a change to the appropriate asset as determined under § 1. 168(i)-8(c) (4)(i), (ii)(C), or (ii)(D), as applicable;

(b) If the taxpayer makes the change specified in section 6.14(3)(a) of this revenue procedure, and if the taxpayer disposed of the asset as determined under section 6. 14(3)(a) of this revenue procedure in a taxable year prior to the year of change (including the taxable year immediately preceding the year of change) but continues to deduct depreciation for such disposed asset under the taxpayer’s present method of accounting, a change from depreciating the disposed asset to recognizing gain or loss upon disposition;

(c) If the taxpayer makes the change specified in section 6.14(3)(a) of this revenue procedure, and if the taxpayer disposed of a portion of the asset as determined under section 6. 14(3)(a) of this revenue procedure in a transaction described in the first sentence in § 1.168(i)-8(d)(1) in a taxable year prior to the year of change (including the taxable year immediately preceding the year of change) but under its present method of accounting continues to deduct depreciation for such disposed portion, a change from depreciating the disposed portion to recognizing gain or loss upon disposition;

(d) If the taxpayer’s present method of accounting for its § 1245 property, depreciable land improvements, or improvements or additions thereto is in accord with § 1. 168(i)-8(c)(4)(i) or (ii), as applicable, and if the taxpayer disposed of an asset as determined under § 1. 168(i)-8(c) (4)(i) or (ii), as applicable, in a taxable year prior to the year of change (including the taxable year immediately preceding the year of change) but under its present method of accounting continues to deduct depreciation for this disposed

June 9, 2025 1508 Bulletin No. 2025–24

asset, a change from depreciating the disposed asset to recognizing gain or loss upon disposition;

(e) If the taxpayer’s present method of accounting for its § 1245 property, depreciable land improvements, or improvements or additions thereto is in accord with § 1. 168(i)-8(c)(4)(i) or (ii), as applicable, and if the taxpayer disposed of a portion of an asset as determined under § 1. 168(i)-8(c)(4)(i) or (ii), as applicable, in a transaction described in the first sentence in § 1. 168(i)-8(d)(1) in a taxable year prior to the year of change (including the taxable year immediately preceding the year of change) but under its present method of accounting continues to deduct depreciation for such disposed portion, a change from depreciating the disposed portion to recognizing gain or loss upon disposition;

(f) A change in the method of identifying which assets in multiple asset accounts or which portions of assets have been disposed of from a method of accounting not specified in § 1.168(i)-8(g)(1) or (2) (i), (ii), or (iii) (for example, the last-in, first-out (LIFO) method of accounting) to a method of accounting specified in § 1. 168(i)-8(g)(1) or (2)(i), (ii), or (iii), as applicable;

(g) If § 1. 168(i)-8(f)(2) applies (disposition of an asset in a multiple asset account) and it is practicable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed asset, a change in the method of determining the unadjusted depreciable basis of the disposed asset from a method of not using the taxpayer’s records to a method of using the taxpayer’s records;

(h) If § 1. 168(i)-8(f)(2) applies (disposition of an asset in a multiple asset account) and it is impracticable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed asset, a change in the method of determining the unadjusted depreciable basis of all assets in the same multiple asset account from an unreasonable method (for example, discounting the cost of the replacement asset to its placed-in-service year cost using the Consumer Price Index) to a reasonable method;

(i) If § 1. 168(i)-8(f)(3) applies (disposition of a portion of an asset) and it is practicable from the taxpayer’s records

to determine the unadjusted depreciable basis of the disposed portion of the asset, a change in the method of determining the unadjusted depreciable basis of the disposed portion of the asset from a method of not using the taxpayer’s records to a method of using the taxpayer’s records;

(j) If § 1. 168(i)-8(f)(3) applies (disposition of a portion of an asset) and it is impracticable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed portion of the asset, a change in the method of determining the unadjusted depreciable basis of the disposed portion of the asset from an unreasonable method (for example, discounting the cost of the replacement portion of the asset to its placed-in-service year cost using the Consumer Price Index) to a reasonable method; or

(k) A change from recognizing gain or loss under § 1. 168(i)-8T upon the disposition of a section 1245 property, depreciable land improvement, or improvement or addition thereto included in a general asset account to recognizing gain or loss upon the disposition of the same asset under § 1. 168(i)-8 if: (A) the taxpayer made the change specified in section 6. 11 of Rev. Proc. 2016-29, section 6. 34 of Rev. Proc. 2015-14, or section 6. 34 of the APPENDIX to Rev. Proc. 2011-14 (revocation of a general asset account election); (B) the taxpayer made a qualifying disposition election under § 1. 168(i)-1T(e)(3)(iii) in a taxable year prior to the year of change for the disposition of such asset; (C) the taxpayer’s present method of accounting for such asset is in accord with § 1. 168(i)-8(c) (4)(i) or (ii), as applicable; and (D) the taxpayer recognized a gain or loss under § 1. 168(i)-8T on the disposition of such asset in a taxable year prior to the year of change.

(4) Manner of making change . (a) A taxpayer (including a qualified small taxpayer as defined in section 6. 01(4)(b) of this revenue procedure) making this change must attach to its Form 3115 a statement with the following: (i) A description of the assets to which this change applies;

(ii) If the taxpayer is making a change specified in section 6.14(3)(a) of this revenue procedure, a description of the assets

for disposition purposes under the taxpayer’s present and proposed methods of accounting;

(iii) If the taxpayer is making the change specified in section 6.14(3)(f) of this revenue procedure, a description of the methods of identifying which assets have been disposed of under the taxpayer’s present and proposed methods of accounting;

(iv) If the taxpayer is making the change specified in section 6.14(3)(h) or (j) of this revenue procedure, a description of the methods of determining the unadjusted depreciable basis of the disposed asset or disposed portion of the asset, as applicable, under the taxpayer’s present and proposed methods of accounting; and

(v) If any asset is public utility property within the meaning of § 168(i)(10), a statement providing that the taxpayer agrees to the following additional terms and conditions:

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

(B) 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 application; and

(C) 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 application to any regulatory body having jurisdiction over the public utility property subject to the application.

(b) A qualified small taxpayer, as defined in section 6.01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev. December 2022) to make this change:

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I; (iv) Part II, all lines except lines 13, 15b, 16, 17, and 19 if the qualified small taxpayer is not making a change in method

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of accounting specified in section 6.14(3) (h) and (j) of this revenue procedure;

(v) Part II, all lines except lines 13, 15b, 16c, 17, and 19 if the qualified small taxpayer is making a change in method of accounting specified in section 6.14(3)(h) or (j) of this revenue procedure;

(vi) Part IV, all lines except line 25; and

(vii) Schedule E. (5) No ruling on asset . The consent granted under section 9 of Rev. Proc. 2015-13 for a change specified in section 6. 14(3)(a) of this revenue procedure is not a determination by the Commissioner that the taxpayer is using the appropriate asset under § 1. 168(i)-8(c)(4) for determining what asset is disposed of by the taxpayer and does not create any presumption that the proposed asset is permissible under § 1. 168(i)-8(c)(4). The director will ascertain whether the taxpayer’s determination of its asset under § 1. 168(i)-8(c)(4) is permissible.

(6) Section 481(a) adjustment (a) A taxpayer changing its method of accounting under section 6. 14 of the revenue procedure may use statistical sampling in determining the § 481(a) adjustment by following the guidance provided in Rev. Proc. 2011-42, 2011-37 I. R. B. 318.

(b) A taxpayer that met the scope requirements of section 4 of Rev. Proc. 2015-20, 2015-9 I. R. B. 694, and that changed its method of accounting under section 6. 39 of Rev. Proc. 2015-14 (which is now this section 6. 14) by following section 5 of Rev. Proc. 2015-20 is required to calculate a section § 481(a) adjustment as of the first day of the year of change that takes into account only dispositions in taxable years beginning on or after January 1, 2014.

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

(i) If the taxpayer is making the change specified in section 6.14(3)(a) of this revenue procedure and if the taxpayer recognized a gain or loss under § 1. 168(i)-8T on the disposition of the § 1245 property, depreciable land improvement, or improvement or addition thereto (or if applicable, a portion of such asset) in a taxable year prior to the year of change; or

(ii) If the taxpayer is making the change specified in section 6.14(3)(k) of this revenue procedure.

(b) If section 6. 14(7)(a) of this revenue procedure does not apply, see section 7. 03 of Rev. Proc. 2015-13 for the § 481(a) adjustment period.

(8) No audit protection . A taxpayer calculating a § 481(a) adjustment under section 6. 14(6)(b) of this revenue procedure that takes into account only dispositions in taxable years beginning on or after January 1, 2014, does not receive audit protection under section 8. 01 of Rev. Proc. 2015-13 for dispositions subject to a change under this section 6. 14 in taxable years beginning before January 1, 2014. See section 5. 05 of Rev. Proc. 2015-20.

(9) Concurrent automatic change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115. If one or more of the changes in that single Form 3115 generate a negative § 481(a) adjustment and other changes in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all the changes that are included in that Form 3115 generating such negative adjustment and a single positive § 481(a) adjustment for all the changes that are included in that Form 3115 generating such positive adjustment.

(b) A taxpayer making this change and any change listed in section 6. 14(9) (b)(i)-(iv) of this revenue procedure for the same year of change should file a single Form 3115 for all of such changes and must enter the designated automatic accounting method change numbers for the 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. For example, a qualified small taxpayer must include on the single Form 3115 the information required to be completed on Form 3115 by a qualified small taxpayer under this revenue procedure for each change in method of accounting included on that Form 3115. The listed changes are:

(i) A change under section 6. 01 of this revenue procedure;

(ii) A change under section 6. 12 of this revenue procedure;

(iii) A change under section 6. 13 of this revenue procedure; and

(iv) A change under section 6. 15 of this revenue procedure.

(10) Designated automatic accounting method change number . The designated automatic accounting method change number for a change to the method of accounting under this section 6. 14 is “206. ”

(11) Contact information . For further information regarding a change under this section, contact Patrick Clinton at (202) 317-7005 (not a toll-free number). . 15 Dispositions of tangible depre- ciable assets in a general asset account (§ 168(i)(4); § 1.168(i)-1) .

(1) Description of change (a) Applicability . This change, as described in Rev. Proc. 2014-54, 2014-41 I. R. B. 675, applies to a taxpayer that wants to make a change in method of accounting that is specified in section 6.15(3) of this revenue procedure for disposing of an asset subject to a general asset account election under § 168(i)(4) and the regulations thereunder. These specified changes are consistent with §§ 1. 168(i)-1(e)(1),

1. 168(i)-1(e)(2)(viii), and 1. 168(i)-1(j), as applicable. This change also may affect the determination of gain or loss from disposing of the asset and may affect whether the taxpayer must capitalize amounts paid to restore a unit of property (as determined under § 1. 263(a)-3(e) or (f)) under § 1. 263(a)-3(k).

(b) Inapplicability . This change does not apply to the following:

(i) Any asset (as determined under § 1. 168(i)-1(e)(2)(viii)) that is not depreciated under § 168 under the taxpayer’s present method of accounting and, if applicable, proposed method of accounting; or

(ii) Any asset not subject to a general asset account election under § 168(i)(4) and the regulations thereunder (but see sections 6. 13 and 6. 14 of this revenue procedure for making a change for dispositions of tangible depreciable assets not subject to a general asset account election).

(2) Certain eligibility rule inapplica- ble . The eligibility rule in section 5. 01(1) (d) of Rev. Proc. 2015-13, 2015-5 I. R. B.

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419, does not apply to a taxpayer making this change.

(3) Covered changes . This section 6. 15 only applies to the following changes in methods of accounting for an asset subject to a general asset account election under § 168(i)(4) and the regulations thereunder:

(a) For purposes of applying § 1. 168(i)-1(e)(2)(viii) (determination of asset disposed of), a change to the appropriate asset as determined under § 1. 168(i)-1(e)(2)(viii)(A) or (B), as applicable;

(b) A change in the method of identifying which assets or which portions of assets have been disposed of from a method of accounting not specified in § 1. 168(i)-1(j)(2)(i)(A), (B), (C), or (D) (for example, the last-in, first-out (LIFO) method of accounting) to a method of accounting specified in § 1.168(i)-1(j)(2) (i)(A), (B), (C), or (D), as applicable;

(c) If § 1. 168(i)-1(j)(3) applies (basis of disposed asset or disposed portion of an asset) and it is practicable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed asset or the disposed portion of an asset, as applicable, a change in the method of determining the unadjusted depreciable basis of the disposed asset or the disposed portion of an asset, as applicable, from a method of not using the taxpayer’s records to a method of using the taxpayer’s records; or

(d) If § 1. 168(i)-1(j)(3) applies (basis of disposed asset or disposed portion of an asset) and it is impracticable from the taxpayer’s records to determine the unadjusted depreciable basis of the disposed asset or the disposed portion of an asset, as applicable, a change in the method of determining the unadjusted depreciable basis of all assets in the same general asset account from an unreasonable method (for example, discounting the cost of the replacement asset to its placed-in-service year cost using the Consumer Price Index) to a reasonable method.

(4) Manner of making change . (a) A taxpayer (including a qualified small taxpayer as defined in section 6. 01(4)(b) of this revenue procedure) making this change must attach to its Form 3115 a statement with the following: (i) A description of the assets to which this change applies;

(ii) If the taxpayer is making the change specified in section 6.15(3)(a) of this revenue procedure, a description of the assets for disposition purposes under the taxpayer’s present and proposed methods of accounting;

(iii) If the taxpayer is making the change specified in section 6.15(3)(b) of this revenue procedure, a description of the methods of identifying which assets have been disposed of under the taxpayer’s present and proposed methods of accounting;

(iv) If the taxpayer is making the change specified in section 6.15(3)(d) of this revenue procedure, a description of the methods of determining the unadjusted depreciable basis of the disposed asset or disposed portion of the asset, as applicable, under the taxpayer’s present and proposed methods of accounting; and

(v) If any asset is public utility property within the meaning of § 168(i)(10), a statement providing that the taxpayer agrees to the following additional terms and conditions:

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

(B) 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 application; and

(C) 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 application to any regulatory body having jurisdiction over the public utility property subject to the application.

(b) A qualified small taxpayer, as defined in section 6.01(4)(b) of this revenue procedure, is required to complete only the following information on Form 3115 (Rev. December 2022) to make this change:

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I;

(iv) Part II, all lines except lines 13, 15b, 16, 17, and 19 if the qualified small taxpayer is not making a change in method of accounting specified in section 6.15(3) (a) and (d) of this revenue procedure;

(v) Part II, all lines except lines 13, 15b, 16c, 17, and 19 if the qualified small taxpayer is making a change in method of accounting specified in section 6.15(3)(a) or (d) of this revenue procedure;

(vi) Part IV, all lines except line 25; and

(vii) Schedule E. (5) No ruling on asset . The consent granted under section 9 of Rev. Proc. 2015-13 for a change specified in section 6. 15(3)(a) of this revenue procedure is not a determination by the Commissioner that the taxpayer is using the appropriate asset under § 1. 168(i)-1(e) (2)(viii) for determining what asset is disposed of by the taxpayer and does not create any presumption that the proposed asset is permissible under § 1. 168(i)-1(e) (2)(viii). The director will ascertain whether the taxpayer’s determination of its asset under § 1. 168(i)-1(e)(2)(viii) is permissible.

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

(i) If the taxpayer makes the change specified in section 6.15(3)(a) of this revenue procedure and if the taxpayer recognized a gain or loss under § 1. 168(i)-1T or § 1. 168(i)-8T, as applicable, on the disposition of a portion of the asset in a taxable year prior to the year of change; or

(iii) If the taxpayer is a qualified taxpayer as defined in section 4.01 of Rev. Proc. 2015-56, 2015-49 I. R. B. 827, and that is within the scope of section 3 of Rev. Proc. 2015-56, and is making the change specified in section 5.02(5)(b) of Rev. Proc. 2015-56 on or before the first taxable year that the qualified taxpayer uses the remodel-refresh safe harbor provided in section 5. 02 of Rev. Proc. 2015-56. (b) If section 6. 15(6)(a) of this revenue procedure does not apply, see section 7. 03 of Rev. Proc. 2015-13 for the § 481(a) adjustment period.

(c) Example . (i) X, a fiscal year taxpayer with a taxable year beginning December 1 and ending

Bulletin No. 2025–24 1511 June 9, 2025

November 30, acquired and placed in service a building and its structural components in 2000. X depreciates this building and its structural components under § 168. The roof is a structural component of the building. X replaced the entire roof in June 2010. On its federal tax return for the taxable year ended November 30, 2010, X did not recognize a loss on the retirement of the original roof and continues to depreciate the original roof. X also capitalized the cost of the replacement roof and has been depreciating this roof under § 168 since June 2010. The adjusted depreciable basis of the original roof at the time of its retirement in 2010 (taking into account the applicable convention) is $11,000, and X claimed depreciation of $1,000 for such roof after its retirement (taking into account the applicable convention) and before the taxable year ended November 30, 2013 (2012 taxable year). Also the 12-month allowable depreciation deduction for the original roof is $500 for the 2012 taxable year, $500 for the taxable year ended November 30, 2014 (2013 taxable year), and $500 for the taxable year ended November 30, 2015 (2014 taxable year). (ii) In accordance with § 1. 168(i)-1T and section 6. 32(1)(a) of the APPENDIX to Rev. Proc. 2011-14, as modified by Rev. Proc. 2012-20, 201214 I.R.B. 700, X filed with its federal tax return for the taxable year ended November 30, 2013, a Form 3115 to: (1) make a late general asset account election to include the building (including its structural components) placed in service in 2000 in one general asset account and the replacement roof in a separate general asset account; and (2) make a late qualifying disposition election for the retirement of the original roof in 2010. As a result, X removed the original roof from the general asset account and reported a net negative § 481(a) adjustment on this Form 3115 of $10,000 (adjusted depreciable basis of $11,000 for the original roof at the time of its retirement (taking into account the applicable convention) less depreciation of $1,000 claimed for such roof after its retirement (taking into account the applicable convention) and before the 2012 taxable year).

(iii) X complies with § 1. 168(i)-1 beginning with its taxable year ended November 30, 2016

(2015 taxable year). In accordance with section 6.15(3)(a) of this revenue procedure, X files a Form 3115 with its federal income tax return for the 2015 taxable year to change to treating the building (including its original roof and other original structural components) placed in service in 2000 as an asset and the replacement roof as a separate asset for disposition purposes. As a result, X must include the original roof that X retired in 2010 in the general asset account. Thus, the net positive § 481(a) adjustment for this change is $8,500 (net loss of $10,000 claimed on the 2012 return for the retirement of the original roof less depreciation of $1,500 for the original roof for the 2012, 2013, and 2014 taxable years) and is included in X’s taxable income for the 2015 taxable year.

(7) Concurrent automatic change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115. If one or more of the changes in that single Form 3115 generate a negative § 481(a) adjustment and other changes in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all the changes that are included in that Form 3115 generating such negative adjustment and a single positive § 481(a) adjustment for all the changes that are included in that Form 3115 generating such positive adjustment. (b) A taxpayer making this change and any change listed in section 6. 15(7) (b)(i)-(iv) of this revenue procedure for the same year of change should file a single Form 3115 for all of such changes and must enter the designated automatic accounting method change numbers for

the 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. For example, a qualified small taxpayer must include on the single Form 3115 the information required to be completed on Form 3115 by a qualified small taxpayer under this revenue procedure for each change in method of accounting included on that Form 3115. The listed changes are:

(i) A change under section 6. 01 of this revenue procedure;

(ii) A change under section 6. 12 of this revenue procedure;

(iii) A change under section 6. 13 of this revenue procedure; and

(iv) A change under section 6. 14 of this revenue procedure.

(8) Designated automatic accounting method change number . The designated automatic accounting method change number for a change to the method of accounting under this section 6. 15 is “207. ”

(9) Contact information . For further information regarding a change under this section, contact Patrick Clinton at (202) 317-7005 (not a toll-free number). . 16 Summary of certain changes in methods of accounting related to disposi- tions of MACRS property

(1) Final regulations . The following chart summarizes the changes in methods of accounting under § 1. 167(a)-4, § 1. 168(i)-1, § 1. 168(i)-7, and § 1. 168(i)-8 that a taxpayer may make under this revenue procedure.

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Depreciation of leasehold improvements:

General Asset Accounts:

Single Asset Accounts or Multiple Asset Accounts for MACRS Property:

Bulletin No. 2025–24 1513 June 9, 2025

Dispositions of MACRS Property (not in a general asset account):

June 9, 2025 1514 Bulletin No. 2025–24

includes the amount that is attributable to all property (including the 1-year QIP) subject to the Form 3115. Alternatively, the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for the 1-year QIP by filing an amended federal income tax return, or an administrative adjustment request under § 6227 (AAR), as applicable, for the property’s placed-in-service year prior to the date the taxpayer files its federal income tax return for the taxable year succeeding the placed-in-service year. In addition, if the 1-year QIP is within the scope of section 3 of Rev. Proc. 2020-25, 2020-19 I. R. B. 785, the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for the 1-year QIP by filing an amended federal income tax return, or AAR, as applicable, in accordance with section 3. 02(3)(a) of Rev. Proc. 2020-25.

(c) Inapplicability . This change does not apply to:

(i) any qualified improvement property placed in service by a taxpayer that made a late election, or withdrew an election, under § 163(j)(7)(B) (electing real property trade or business) or § 163(j) (7)(C) (electing farming business) for the taxable year in which the qualified improvement property is placed in service by the taxpayer, in accordance with Rev. Proc. 2020-22, 2020-18 I. R. B. 745. Any changes to depreciation for such qualified improvement property, or other depreciable property, affected by the late election or withdrawn election under § 163(j)(7) (B) or (C) are made in accordance with sections 4. 02 and 4. 03, or 5. 02 of Rev. Proc. 2020-22, as applicable;

(ii) any qualified improvement property for which the taxpayer is changing from deducting the cost or other basis as an expense to capitalizing and depreciating the cost or other basis, or vice versa ;

(iii) any qualified improvement property for which the taxpayer is changing its method of accounting for depreciation to the method of accounting for depreciation provided in § 1. 168(i)-4, which applies when there is a change in use of the property (but see section 6. 04 or 6. 05 of this revenue procedure for making this change); or

17 Depreciation of fiber optic transfer node and fiber optic cable used by a cable system operator (§§ 167 and 168)

(1) Description of change . (a) Applicability . 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 change to the safe harbor method of accounting provided in section 8. 03 of Rev. Proc. 2015-12 for determining depreciation under §§ 167 and 168 of a fiber optic transfer node and trunk line consisting of fiber optic cable used in a cable distribution network providing one-way and two-way communication services. The safe harbor method provided by section 8. 03 of Rev. Proc. 2015-12 determines the asset for purposes of §§ 167 and 168.

(b) Inapplicability . This change does not apply to the following:

(i) any property that is not depreciated under § 168 under the taxpayer’s present and proposed methods of accounting; or

(ii) any property that is not owned by the taxpayer at the beginning of the year of change.

(2) Certain eligibility rule inapplica- ble . The eligibility rule in section 5. 01(1) (d) of Rev. Proc. 2015-13 does not apply to a taxpayer that makes this change.

(3) Concurrent automatic change . (a) A taxpayer that wants to make this change for more than one asset for the same year of change should file a single Form 3115 for all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115. If one or more of the changes in that single Form 3115 generate a negative § 481(a) adjustment and other changes in that same Form 3115 generate a positive § 481(a) adjustment, the taxpayer may provide a single negative § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment and a single positive § 481(a) adjustment for all the changes that are included in that Form 3115 generating such adjustment.

(b) A taxpayer that wants to make both this change and a change to a UNICAP method under section 12. 01, 12. 02, 12. 08, or 12. 12 of this revenue procedure, as applicable, for the same year of change should file a single Form 3115 for all such changes and must enter the

designated automatic accounting method change numbers for the 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.

(4) Designated automatic accounting method change number . The designated automatic accounting method change number for a change to the method of accounting under this section 6. 17 is “210. ”

(5) Contact information . For further information regarding a change under this section, contact Charles Magee at (202) 317-7005 (not a toll-free number).. 18 Qualified improvement property placed in service after December 31, 2017 (§ 168).

(1) Description of change . (a) Applicability . This change applies to a taxpayer that wants to change from an impermissible to a permissible method of accounting for depreciation of any item of qualified improvement property, as defined in § 168(e)(6):

(i) that is placed in service by the taxpayer after December 31, 2017;

(ii) for which the taxpayer used the impermissible method of accounting in at least two taxable years immediately preceding the year of change (but see section 6. 18(1)(b) of this revenue procedure for qualified improvement property placed in service in the taxable year immediately preceding the year of change); and

(iii) that is owned by the taxpayer at the beginning of the year of change (but see section 6. 07 of this revenue procedure for property disposed of before the year of change).

(b) Taxpayer has not adopted a method of accounting for the qualified improve- ment property . If a taxpayer does not satisfy section 6. 18(1)(a)(ii) of this revenue procedure for an item of qualified improvement property because the item of qualified improvement property is placed in service by the taxpayer in the taxable year immediately preceding the year of change (1-year QIP), the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for the 1-year QIP by filing a Form 3115 for this change, provided the § 481(a) adjustment reported on the Form 3115

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(iv) any change in method of accounting to which section 6. 20 of this revenue procedure applies.

(2) Reduced filing requirement . A taxpayer making a change under this section 6. 18 is required to complete only the following information on Form 3115 (Rev. December 2022):

(a) The identification section of page 1 (above Part I);

(b) The signature section at the bottom of page 1;

(c) Part I; (d) Part II, all lines except lines 11, 12, 13, 15, 16, 17, and 19; (e) Part IV, all lines; and (f) Schedule E, all lines except lines 1, 4b, 5, and 6. (3) Concurrent automatic change . (a) A taxpayer making this change for more than one asset for the same year of change should file a single Form 3115 for all such assets and provide a single net § 481(a) adjustment for all the changes included in that Form 3115.

(b) A taxpayer making this change and the change in section 6. 01 or 6. 19 of this revenue procedure for the same year of change should file a single Form 3115 for all such changes and must enter the designated automatic accounting method change numbers on the appropriate line of the Form 3115. See section 6. 03(1)(b) of Rev. Proc. 2015-13 for information on making concurrent changes.

(4) Designated automatic accounting method change number . The designated automatic accounting method change number for a change to the method of accounting under this section 6. 18 is “244. ”

(5) Contact information . For further information regarding a change under this section, contact Elizabeth Binder at (202) 317-7005 (not a toll-free number). . 19 Certain late elections under §§ 168 and 1502 or revocation of certain elec- tions under § 168 (§ 168(g)(7), (k)(5), (k)(7), and (k)(10); §§ 1.168(k)-2 and 1.1502-68) (1) Description of change . (a) Applicability . This change applies to a taxpayer within the scope of section 5 of Rev. Proc. 2020-50, 2020-48 I. R. B. 1122, that wants to make a late election under § 168(k)(5), (7), or (10), § 1. 168(k)-2(c) (component election), § 1. 1502-68(c)

(4) (designated transaction election), or proposed § 1. 168(k)-2(c) (proposed component election) as provided in section 5. 02(2) of Rev. Proc. 2020-50. This change also applies to a taxpayer within the scope of section 6 of Rev. Proc. 202050 that wants to revoke an election under § 168(k)(5), (k)(7), or (k)(10), or a proposed component election as provided in section 6. 02(2)(b) of Rev. Proc. 2020-50.

(b) Inapplicability . The IRS will treat the making of a late election under § 168(k)(5), (7), or (10), a late component election, a late designated transaction election, or a late proposed component election as provided in section 5 of Rev. Proc. 2020-50, or the revocation of an election under § 168(k)(5), (k)(7), or (k) (10), or a proposed component election as provided in section 6 of Rev. Proc. 202050, as a change in method of accounting with a § 481(a) adjustment only for the taxable years specified in section 6.19(2) of this revenue procedure. This treatment does not apply to a taxpayer that makes these late elections or revocations before or after the time specified in section 6. 19(2) of this revenue procedure, and any such late election or revocation is not a change in method of accounting pursuant to § 1. 446-1(e)(2)(ii)( d )( 3 )( iii ).

(2) Time for making the change . The change under section 6. 19(1)(a) and (b) of this revenue procedure must be made for the taxpayer’s first or second taxable year succeeding the taxable year in which the taxpayer (A) placed in service the property affected by the late election under § 168(k)(7) or (10), the late component election, the late designated transaction election, or the late proposed component election, as applicable, or by the revocation of the election under § 168(k)(7) or (k)(10), or the proposed component election, as applicable, or (B) planted or grafted the specified plant to which the late § 168(k)(5) election applies or to which the revocation of the election under § 168(k)(5) applies.

(3) Certain eligibility rules inapplica- ble . The eligibility rules in section 5. 01(1) (d) and (f) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, do not apply to the change under section 6. 19(1)(a) and (b) of this revenue procedure for the taxpayer’s first or second taxable year succeeding the taxable year in which the taxpayer (A) placed

in service the property affected by the late election under § 168(k)(7) or (10), the late component election, the late designated transaction election, or the late proposed component election, as applicable, or by the revocation of the election under § 168(k)(7) or (k)(10), or the proposed component election, as applicable, or (B) planted or grafted the specified plant to which the late § 168(k)(5) election applies or to which the revocation of the election under § 168(k)(5) applies.

(4) Reduced filing requirement . A taxpayer making a change under this section 6. 19 is required to complete only the following information on Form 3115 (Rev. December 2022):

(a) The identification section of page 1 (above Part I);

(b) The signature section at the bottom of page 1;

(c) Part I; (d) Part II, all lines except lines 11, 12, 13, 15, 16, 17, and 19; (e) Part IV, all lines; and (f) Schedule E, all lines except lines 1, 4b, 5, and 6. (5) Concurrent automatic change . (a) A taxpayer making one or more late elections and/or revoking one or more elections under sections 5 and 6 of Rev. Proc. 2020-50 for the same year of change must file a single Form 3115 for all such changes. The single Form 3115 must provide a single net § 481(a) adjustment for all such changes for all assets placed in service, and all specified plants planted or grafted, by the taxpayer during the same taxable year. See section 6. 03(1)(b) of Rev. Proc. 2015-13 for information on making concurrent changes.

(b) A taxpayer making one or more changes under this section 6. 19 and the change in section 6. 01, 6. 18, or 6. 20 of this revenue procedure for the same year of change must file a single Form 3115 for all such changes and must enter the designated automatic accounting method change numbers on the appropriate line on the Form 3115. The single Form 3115 must provide a single net § 481(a) adjustment for all such changes for all assets placed in service, and all specified plants planted or grafted, by the taxpayer during the same taxable year. See section 6. 03(1) (b) of Rev. Proc. 2015-13 for information on making concurrent changes.

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the taxable year immediately preceding the year of change).

(b) If a taxpayer does not satisfy section 6. 20(3)(a) of this revenue procedure for depreciable property that is within the scope of section 4. 03 of Rev. Proc. 202050, as modified by section 6.20(1)(b) of this revenue procedure, because the depreciable property is placed in service by the taxpayer in the taxable year immediately preceding the year of change (1-year Property), the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for the 1-year Property by filing a Form 3115 for this change in accordance with this section 6. 20(3), provided the § 481(a) adjustment reported on the Form 3115 includes the amount of any adjustment attributable to all property, including the 1-year Property, subject to the Form 3115. Similarly, for a specified plant that is within the scope of section 4. 03 of Rev. Proc. 202050, as modified by section 6.20(1)(b) of this revenue procedure, and is planted or grafted by the taxpayer in the taxable year immediately preceding the year of change (1-year Plant), the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation under this section 6. 20(3) for the 1-year Plant by filing a Form 3115 for this change in accordance with this section 6. 20(3), provided the § 481(a) adjustment reported on the Form 3115 includes the amount of any adjustment attributable to all property, including the 1-year Plant, subject to the Form 3115. Alternatively, the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for the 1-year Property or 1-year Plant by filing an amended federal income tax return, or an administrative adjustment request under § 6227 (AAR), as applicable, for the 1-year Property’s placed-inservice year or 1-year Plant’s planting or grafting year, as applicable, prior to the date the taxpayer files its federal income tax return for the taxable year succeeding the placed-in-service year or planting or grafting year, as applicable. In addition, if the 1-year Property or 1-year Plant is within the scope of section 4. 03 of Rev. Proc. 2020-50, as modified by section

(6) Designated automatic accounting method change number . The designated automatic accounting method change number for a change to the method of accounting under this section 6. 19 is “245. ”

(7) Contact information . For further information regarding a change under this section, contact Elizabeth Binder at (202) 317-7005 (not a toll-free number). . 20 Change in depreciation as a result of applying the additional first year depreciation regulations (§ 168(k); §§ 1.168(k)-2 and 1.1502-68)

(1) Description of Change (a) Applicability . This change applies to a taxpayer within the scope of section 4 of Rev. Proc. 2020-50, 2020-48 I. R. B. 1122, that wants to change its method of accounting for depreciation under § 168 to comply with the Final Regulations (as defined in section 2.02(6) of Rev. Proc. 2020-50), the 2019 final regulations (as defined in section 2.02(2) of Rev. Proc. 2020-50), or both the 2019 final regulations and the 2019 proposed regulations (as defined in section 1 of Rev. Proc. 2020-50), as applicable, for depreciable property and specified plants within the scope of section 4 of Rev. Proc. 2020-50. A change under this section 6. 20 applies to (i) a taxpayer that is changing from an impermissible method of accounting to a permissible method of accounting under section 4. 03(4)(b) of Rev. Proc. 2020-50 and section 6. 20(3) of this revenue procedure, and (ii) a taxpayer that is changing from one permissible method of accounting to another permissible method of accounting under section 4. 04 of Rev. Proc. 2020-50 and section 6. 20(4) of this revenue procedure. For purposes of this section 6. 20, a taxpayer is deemed to change from an impermissible method of accounting to a permissible method of accounting when, for the first time, the taxpayer changes its method of accounting for depreciation under this section 6. 20 for depreciable property and specified plants described in section 4.02(1) of Rev. Proc. 2020-50 to comply with the Final Regulations, the 2019 final regulations, or both the 2019 final regulations and the 2019 proposed regulations. Further, any subsequent time the taxpayer changes its method of accounting for depreciation for depreciable property

and specified plants described in section 4. 02(1) of Rev. Proc. 2020-50 to comply with the Final Regulations, the 2019 final regulations, or both the 2019 final regulations and the 2019 proposed regulations, is a change from a permissible method of accounting to another permissible method of accounting under this section 6. 20. See section 4. 02(2) of Rev. Proc. 2020-50.

(b) Inapplicability . This change does not apply to any property for which the taxpayer is changing its method of accounting for depreciation to the method of accounting for depreciation provided in § 1. 168(i)-4, which applies when there is a change in use of the property (but see section 6. 04 or 6. 05 of this revenue procedure for making this change).

(2) Certain eligibility rules inapplica- ble .

(a) In general . The eligibility rule in section 5. 01(1)(d) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, does not apply to a taxpayer making this change for the property and specified plant within the scope of section 4 of Rev. Proc. 2020-50, as modified by section 6.20(1)(b) of this revenue procedure.

(b) Special rule . The eligibility rule in section 5. 01(1)(f) of Rev. Proc. 2015-13, 2015-5 I. R. B. 419, does not apply to a taxpayer making this change for the property and specified plant within the scope of section 4 of Rev. Proc. 2020-50, as modified by section 6.20(1)(b) of this revenue procedure, for the taxpayer’s first or second taxable year succeeding the taxable year in which the taxpayer placed in service such property, or planted or grafted such specified plant, as applicable.

(3) Impermissible to permissible method of determining the depreciation deduction allowable

(a) A taxpayer may change from an impermissible method of accounting to a permissible method of accounting under section 4. 03 of Rev. Proc. 2020-50 for the property and specified plant within the scope of section 4. 03 of Rev. Proc. 202050, as modified by section 6.20(1)(b) of this revenue procedure, for which the taxpayer used the impermissible method of accounting in at least two taxable years immediately preceding the year of change (but see section 6. 20(3)(b) of this revenue procedure for property placed in service or a specified plant planted or grafted in

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6. 20(1)(b) of this revenue procedure, the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for the 1-year Property or 1-year Plant by filing an amended federal income tax return, or AAR, as applicable, in accordance with section 4. 03(4)(a) of Rev. Proc. 2020-50.

(c) A change under section 4. 03(4)(b) of Rev. Proc. 2020-50 and this section 6. 20(3) is made with a § 481(a) adjustment. However, consent to make a change in method of accounting under this section 6. 20 will be granted by the Commissioner only if the taxpayer satisfies section 4.02 of Rev. Proc. 2020-50, to the extent relevant. Further, if a taxpayer that has a trade or business with floor plan financing indebtedness is applying § 1. 168(k)-2(b) (2)(ii)(G) of the Final Regulations, § 1.168(k)-2(b)(2)(ii)(G) of the 2019 final regulations, or both § 1. 168(k)-2(b)(2) (ii)(G) of the 2019 final regulations and § 1. 168(k)-2(b)(2)(ii)(G) of the 2019 proposed regulations for depreciable property placed in service by the taxpayer in its 2018, 2019, or 2020 taxable year, consent to make a change in method of accounting under this section 6. 20 will be granted by the Commissioner only if the amount of the § 481(a) adjustment is adjusted to account for the proper amount of interest expense, taking into account the business interest limitation under § 163(j) and the regulations thereunder, as of the beginning of the year of change.

(4) Permissible to another permissible method of determining the depreciation deduction allowable .

(a) A taxpayer may change from one permissible method of accounting to another permissible method of accounting under section 4. 04 of Rev. Proc. 2020-50 for the property and specified plant within the scope of section 4. 04 of Rev. Proc. 2020-50, as modified by section 6.20(1) (b) of this revenue procedure.

(b) A change under section 4. 04 of Rev. Proc. 2020-50 and this section 6. 20(4) is made on a cut-off basis. Accordingly, neither the modified cut-off method, as described in § 1. 446-1(e)(2)(ii)( d )( 5 )( iii ), nor a § 481(a) adjustment is permitted or required.

(5) Additional requirement . A taxpayer making a change under this section 6. 20

also must comply with section 4. 02 of Rev. Proc. 2020-50, to the extent relevant. Once a taxpayer applies § 1. 168(k)-2 and, to the extent relevant, § 1. 1502-68, of the Final Regulations, in their entirety, for a taxable year, the taxpayer must continue to apply § 1. 168(k)-2 and, to the extent relevant, § 1. 1502-68, of the Final Regulations, in their entirety, for the taxpayer’s subsequent taxable years. See §§ 1. 168(k)-2(h)(3)(iii) and 1. 1502-68(e) (2)(iii) of the Final Regulations and section 4. 02(1) of Rev. Proc. 2020-50.

(6) Reduced filing requirement . A taxpayer making a change under this section 6. 20 is required to complete only the following information on Form 3115 (Rev. December 2022):

(a) The identification section of page 1 (above Part I);

(b) The signature section at the bottom of page 1;

(c) Part I; (d) Part II, all lines except lines 11, 12, 13, 15, 16, 17, and 19; (e) Part IV, all lines; and (f) Schedule E, all lines except lines 1, 4b, 5, and 6. (7) Concurrent automatic change . (a) A taxpayer making this change must file a single Form 3115 for all assets placed in service, and all specified plants planted or grafted, by the taxpayer during the same taxable year and must provide a single net § 481(a) adjustment for all the changes included in that Form 3115.

(b) A taxpayer making one or more changes under section 6. 20(3) of this revenue procedure and the change in section 6. 01, 6. 18, or 6. 19 of this revenue procedure for the same year of change must file a single Form 3115 for all such changes and must enter the designated automatic accounting method change numbers on the appropriate line on the Form 3115. The single Form 3115 must provide a single net § 481(a) adjustment for all such changes for all assets placed in service, and all specified plants planted or grafted, by the taxpayer during the same taxable year. See section 6. 03(1)(b) of Rev. Proc. 2015-13 for information on making concurrent changes.

(8) Designated automatic accounting method change numbers . The designated automatic accounting method change number for (a) a change under section

6. 20(3) of this revenue procedure is “246”, and (b) a change under section 6. 20(4) of this revenue procedure is “247. ”

(9) Contact information . For further information regarding a change under this section, contact Elizabeth Binder at (202) 317-7005 (not a toll-free number).. 21 Depreciation of tangible property under § 168(g) by controlled foreign cor- porations

(1) Description of change . This change is applicable to a controlled foreign corporation (as defined in § 957(a)) (CFC) that seeks to change its method of accounting for depreciation for an item of property that is described in § 168(g)(1)(A) (except for property excluded from the application of § 168 as a result of § 168(f)) and owned by the CFC at the beginning of the year of change to the permissible depreciation method, convention, and recovery period prescribed under the alternative depreciation system (ADS) in § 168(g) for such property in determining the CFC’s gross and taxable income under § 1. 952-2 as well as its earnings and profits (“E&P”) under §§ 964 and 986(b) and the regulations thereunder. This change applies regardless of whether the method of accounting for depreciation that the CFC wants to change pursuant to this section 6. 21 is impermissible or permissible under the Internal Revenue Code and the regulations thereunder.

(2) CFC has not adopted a method of accounting for the item of property . If a CFC placed in service an item of property described in section 6. 21(1) of this revenue procedure in the taxable year immediately preceding the year of change (1-year property), the CFC may change its method of determining depreciation for the 1-year property to ADS if the designated shareholder files a Form 3115 for this change, provided the § 481(a) adjustment attributable to the 1-year property is included on the Form 3115. Alternatively, the CFC may change its impermissible method of determining depreciation for the 1-year property to ADS if each U. S. shareholder of the CFC (or the agent described in § 1.1502-77(a), if applicable) files an amended federal income tax return for the taxable year in which or with which the property’s placed-in-service year ends prior to the date the shareholder files its federal income tax return for the taxable

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year in which or with which the CFC’s taxable year succeeding the placed-in-service year ends.

(3) Section 481(a) adjustment . A § 481(a) adjustment is required with respect to a change made under this section 6. 21 for any CFC.

(4) Certain eligibility rules inapplica- ble . The eligibility rules in section 5. 01(1) (c), (d), (e), and (f) of Rev. Proc. 201513, 2015-5 I. R. B. 419, do not apply to this change.

(5) Short Form 3115 in lieu of a stan- dard Form 3115 . In accordance with § 1. 446-1(e)(3)(ii), the requirement in § 1.446-1(e)(3)(i) to file a standard Form 3115 is waived and, pursuant to section 6. 02(2) of Rev. Proc. 2015-13, a short Form 3115 is authorized with respect to any CFC making a change under this section 6. 21. The short Form 3115 (Rev. December 2022) must include the following information:

(a) The identification section of page 1 (above Part I);

(b) The signature section at the bottom of page 1;

(c) Part I; (d) Part II, all lines except lines 10, 13, 16, and 19; (e) Part IV; and (f) Schedule E. (6) Concurrent automatic changes . A designated shareholder making an accounting method change on behalf of a CFC under this section 6. 21 with respect to more than one asset for the same year of change may file a single short Form 3115 for all such changes. If any § 481(a) adjustment (or any component of a § 481(a) adjustment) from a change that is included in that Form 3115 shares all of the same characteristics as any other § 481(a) adjustment (or component) from a change that is included in that Form 3115, those § 481(a) adjustments (or components) must be provided as a single § 481(a) adjustment, with the characteristics identified, in the Form 3115. Any § 481(a) adjustment (or component of a § 481(a) adjustment) from a change that is included in that Form 3115 that does not share all of the same characteristics as any other § 481(a) adjustment (or component) from a change that is included in that Form 3115 must be provided as a separate § 481(a) adjustment, with the char

acteristics identified, in the Form 3115. A § 481(a) adjustment (or any component of a § 481(a) adjustment) shares all of the same characteristics as another § 481(a) adjustment (or component) if:

(i) The § 481(a) adjustments (or components) relate to the same qualified business unit (QBU), as defined in § 989(a) and § 1. 989(a)-1(b);

(ii) If applicable, the § 481(a) adjustments (or components) relate to the same tested unit, as defined in § 1.951A-2(c)(7) (iv);

(iii) The § 481(a) adjustments (or components) are either all positive or all negative, as applicable (for this purpose a negative component of an overall positive adjustment will be treated as positive and a positive component of an overall negative adjustment will be treated as negative); and

(iv) The § 481(a) adjustments (or components) have the same source, separate limitation classification, character, and treatment under section 7. 07(2) of Rev. Proc. 2015-13, as modified by section 4 of Rev. Proc. 2021-26, 2021-22 I. R. B. 1163, 1167-68. (7) Designated automatic accounting method change number . The designated automatic accounting method change number for a change under this section 6. 21 is “248. ” (8) Contact information . For further information regarding a change under this section, contact Dylan Steiner at (202) 317-6934 (not a toll-free number).