Change of Accounting Method Procedures Updated


The IRS has released the list of specific changes in accounting method to which the automatic change procedures in Rev. Proc. 2015-13, I.R.B. 2015-5, 419, apply. This guidance updates and supersedes in part the list found in Rev. Proc. 2017-30, I.R.B. 2017-18, 1131.

Significant Changes
Significant changes made to the list of automatic changes in Rev. Proc. 2017-30 include:

Section 6.11, paragraph (2)(b), regarding the temporary waiver of the eligibility rule in section 5.01(1)(f) of Rev. Proc. 2015-13, is removed because it is obsolete. The waiver of the eligibility rule in section 5.01(1)(d) of Rev. Proc. 2015-13 continues to apply to this change.

Section 6.18, regarding the revocation of the partial disposition election under the remodel-refresh safe harbor described in Rev. Proc. 2015-56, is obsolete and is removed in its entirety.

Section 11.10, regarding a change to the remodel-refresh safe harbor described in Rev. Proc. 2015-56, is modified to remove paragraph (2), regarding the temporary waiver of the eligibility rules in sections 5.01(1)(d) and (f) of Rev. Proc. 2015-13, because they are obsolete.

Section 12.01, regarding certain uniform capitalization (UNICAP) methods used by resellers and reseller-producers, is modified to provide that a small reseller is not permitted to make a change in method of accounting described in section 12.01(1)(a)(i) of Rev. Proc. 2018-31 for any tax year beginning after December 31, 2017.

Section 15.03, regarding taxpayers changing to overall cash receipts and disbursements method, and section 21.03 (now section 22.03 of Rev. Proc. 2018-31), regarding the small taxpayer exception from requirement to account for inventories under Code Sec. 471, are modified to provide that these changes do not apply for any tax year beginning after December 31, 2017.

Section 15.14, regarding nonshareholder contributions to capital, is modified to provide that the change described in section 15.14(1)(a)(ii) does not apply to contributions made after December 22, 2017.

Section 16.07, regarding changes for advance payments, is modified to provide that the eligibility rule in section 5.01(1)(f) of Rev. Proc. 2015-13 does not apply to a taxpayer that changes to a method of accounting provided under section 16.07(1)(a)(i) of Rev. Proc. 2018-31 for the taxpayer’s first or second tax year ending on or after May 9, 2018.
Section 16.07 also is modified to provide that a taxpayer is not permitted to make a change in method of accounting described in section 16.07(1)(a)(ii) of Rev. Proc. 2018-31 for any tax year beginning after December 31, 2017.

Section 21.15 (now section 22.15 of Rev. Proc. 2018-31), regarding sales-based vendor chargebacks, is modified to remove paragraph (2), regarding the temporary waiver of the eligibility rule in section 5.01(1)(f) of Rev. Proc. 2015-13, because it is obsolete.

Section 23.01 (now section 24.01 of Rev. Proc. 2018-31), regarding certain taxpayers that have elected the mark-to-market method of accounting under Code Sec. 475(e) or (f), is modified to provide that the waiver of the eligibility rule in section 5.01(1)(f) of Rev. Proc. 2015-13 no longer applies to this change. The waiver of the eligibility rule in section 5.01(1)(d) of Rev. Proc. 2015-13 continues to apply to this change.

Section 23.02 (now section 24.02 of Rev. Proc. 2018-31), regarding a taxpayer changing its method of accounting for securities or commodities from the mark-to-market method of accounting described in Code Sec. 475 to a realization method of accounting, is modified to provide that the waiver of the eligibility rule in section 5.01(1)(f) of Rev. Proc. 2015-13 no longer applies to this change. The waiver of the eligibility rule in section 5.01(1)(d) of Rev. Proc. 2015-13 continues to apply to this change.

Effective Date
Subject to certain transition rules, the changes are effective for a Form 3115 filed on or after May 9, 2018, for a year of change ending on or after September 30, 2017, that is filed under the automatic change procedures

Rev. Proc. 2017-30, as amplified and modified, is superseded in part.