Application for Change in Accounting Method

Instructions for Form 3115

Department of the Treasury
Internal Revenue Service

(Rev. March 2012)

(Use with the December 2009 revision of Form 3115)
Application for Change in Accounting Method
Section references are to the Internal Revenue Code unless
otherwise noted.
All references to Rev. Proc. 97-27 are to Rev. Proc. 97-27,
1997-1 C.B. 680 (as modified and amplified by Rev. Proc.
2002-19, 2002-1 C.B. 696, as amplified and clarified by Rev.
Proc. 2002-54, 2002-2 C.B. 432), as modified by Rev. Proc.
2007-67, 2007-2 C.B. 1072), as clarified and modified by Rev.
Proc. 2009-39, 2009-2 C.B. 371 and as clarified and modified
by Rev. Proc. 2011-14, 2011-4 I.R.B. 330, or its successor.
All references to Rev. Proc. 2011-14 are to Rev. Proc.
2011-14, 2011-4 I.R.B. 330, or its successor. (Note. Rev. Proc.
2011-14 amplified, clarified, modified, and, in part, superceded
Rev. Proc. 2008-52, 2008-36 I.R.B. 587.)
All references to Rev. Proc. 2012-1 are to Rev. Proc.
2012-1, 2012-1 I.R.B. 1, or its successor (updated annually).

General Instructions
What’s New
Future developments. The IRS has created a page on
IRS.gov for information about Form 3115 at www.irs.gov/
form3115. Information about any future developments affecting
Form 3115 (such as legislation enacted after we release it) will
be posted to that page.

Purpose of Form
File Form 3115 to request a change in either an overall method
of accounting or the accounting treatment of any item.
Two procedures exist under which an applicant may request
a change in method of accounting.
Automatic change request procedures. Unless otherwise
provided in published guidance, you must file under the
automatic change request procedures if (a) the change in
method of accounting is included in those procedures for the
requested year of change, and (b) you are within the scope of
those procedures for the requested year of change. See
Automatic Change Request Scope Limitations, later. A Form
3115 filed under these procedures may be reviewed by the IRS
and you will be notified if information in addition to that
requested on Form 3115 is required or if your request is denied.
No user fee is required. An applicant that timely files and
complies with an automatic change request procedure is
granted consent to change its accounting method, subject to
review by the IRS National Office and operating division
director. See the instructions for Part I and the List of Automatic
Accounting Method Changes, later.
Ordinarily, a taxpayer is required to file a separate Form
3115 for each change in method of accounting. However, in
some cases you are required or permitted to file a single Form
3115 for particular concurrent changes in method of accounting.
Further, in some cases you are required or permitted to file a
statement in lieu of a Form 3115 for particular changes in
method of accounting. See section 6.02(1)(a) and (b) of Rev.
Proc. 2011-14 for more information.
Advance consent request procedures. If you are not within
the scope of any automatic change request procedures for the
requested year of change or the accounting method change
you are requesting is not included in those procedures for the
requested year of change, you may be able to file under the
advance consent request procedures. See Advance Consent
Mar 22, 2012

Request Scope Limitations, later. If the requested change is
approved, the filer will receive a letter ruling on the requested
change. File a separate Form 3115 for each unrelated item or
submethod. A user fee is required. See the instructions for
Part III later for more information.
For general rules on changing an accounting method under:
Automatic change
See generally Rev. Proc. 2011-14.
request procedures . . .
Advance consent
See Rev. Proc. 97-27, as amplified,
request procedures . . . clarified and modified by Rev. Proc.
2002-19, Rev. Proc. 2002-54, Rev. Proc.
2007-67, Rev. Proc. 2009-39, and Rev.
Proc. 2011-14.
For more information, see Rev. Proc. 2012-1 (or its successor),
particularly section 9.

When filing Form 3115, you must determine if the IRS
has published any new revenue procedure, revenue
CAUTION ruling, notice, regulation, or other published guidance
relating to the specific method the applicant is requesting to
change. This guidance is published in the Internal Revenue
Bulletin. For the latest information, visit IRS.gov.

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Who Must File
The entity or person required to file Form 3115, whether on its
own behalf or on behalf of another entity, is the filer. The entity,
trade or business, or person on whose behalf the change in
method of accounting is being requested is the applicant. For
example, the common parent corporation of a consolidated
group is the filer when requesting a change in method of
accounting for another member of that consolidated group (or a
separate and distinct trade or business of that member), and
the other member (or trade or business) on whose behalf the
Form 3115 is filed is the applicant. For information on the
difference between a filer and an applicant, see Name(s) and
Signature(s), later.
An applicant is an entity or a person, or a separate and
distinct trade or business of an entity or a person (for purposes
of Regulations section 1.446-1(d)), whose method of
accounting is being changed.
For a consolidated group of corporations, the common
parent corporation must file Form 3115 for a change in method
of accounting for itself or any member of the consolidated
group.
For a CFC or 10/50 corporation without a U.S. trade or
business, Form 3115 must be filed by the designated
(controlling domestic) shareholder who retains the jointly
executed consent described in Regulations section
1.964-1(c)(3)(ii). If the controlling domestic shareholder is a
member of a consolidated group, the common parent
corporation must file Form 3115 for the controlling domestic
shareholder on behalf of the foreign corporation. For an
automatic change, the controlling domestic shareholder(s) (or
its common parent) must attach a copy of the Form 3115 to its
income tax return for its tax year with or within which the CFCs
or 10/50 corporation’s year of change tax year ends.
Generally, a filer must file a separate Form 3115 for each
applicant seeking consent to change a method of accounting.
For example, a filer must file a separate Form 3115 for each

Cat. No. 63215H

File Form 3115 at the applicable IRS address listed below.
For applicants (other than exempt organizations)
filing . . .
An advance consent request

The National Office copy of an automatic
change request

Ogden, Utah copy

Delivery by
mail

Internal Revenue Service
Attn: CC:PA:LPD:DRU
P.O. Box 7604
Benjamin Franklin Station
Washington, DC 20044

Internal Revenue Service
Automatic Rulings Branch
P.O. Box 7604
Benjamin Franklin Station
Washington, DC 20044

Internal Revenue Service
1973 North Rulon White Blvd.
Mail Stop 4917
Ogden, UT 84404

Delivery by
private
delivery
service

Internal Revenue Service
Attn: CC:PA:LPD:DRU
Room 5336
1111 Constitution Ave., NW
Washington, DC 20224

Internal Revenue Service
Automatic Rulings Branch
Room 5336
1111 Constitution Ave., NW
Washington, DC 20224

Internal Revenue Service
1973 North Rulon White Blvd.
Mail Stop 4917
Ogden, UT 84404

For exempt organizations filing an advance consent request or the National Office
copy of an automatic change request

Ogden, Utah copy

By mail

Internal Revenue Service
Tax Exempt & Government Entities
P.O. Box 2508
Cincinnati, OH 45201

Internal Revenue Service
1973 North Rulon White Blvd.
Mail Stop 4917
Ogden, UT 84404

By private delivery service

Internal Revenue Service
Tax Exempt & Government Entities
550 Main Street, Room 4024
Cincinnati, OH 45202

Internal Revenue Service
1973 North Rulon White Blvd.
Mail Stop 4917
Ogden, UT 84404

When and Where To File

corporation (with a single trade or business) that is part of a
related group of corporations. A filer also must file a separate
Form 3115 for each separate and distinct trade or business
(including a QSub or single-member LLC) of each corporation
or other entity, even if the requested change in method of
accounting will be used by all separate and distinct trades or
businesses of an entity.
Each partnership entity must file on its own behalf even if
multiple related or tiered partnership entities are filing for
identical changes in method of accounting.
There are three limited exceptions to the requirement to file
a separate Form 3115 for each applicant seeking consent to
change a method of accounting. The filer may file a single Form
3115 for multiple applicants in each of the 3 following situations
(separately, but not in any combination):
• A common parent of a consolidated group or other entity
requesting an identical change in method of accounting for two
or more (a) members of that consolidated group, or (b) separate
and distinct trades or businesses (for purposes of Regulations
section 1.446-1(d)) of that entity or members of the
consolidated group, including a QSub or single-member LLC.
• A common parent of a consolidated group requesting an
identical change in method of accounting on behalf of two or
more controlled foreign corporations (CFCs) or noncontrolled
section 902 corporations (10/50 corporations), or separate and
distinct trades or businesses of a CFC or 10/50 corporation,
that do not engage in a trade or business within the United
States where all controlling U.S. shareholders of the CFC and
all majority domestic corporate shareholders of the 10/50
corporations are members of the consolidated group.
• A taxpayer requesting an identical change in method of
accounting on behalf of two or more CFCs or 10/50
corporations, or separate and distinct trades or businesses of a
CFC or 10/50 corporation, that do not engage in a trade or
business within the United States for which the taxpayer is the
sole controlling U.S. shareholder of the CFCs or the sole
domestic corporate shareholder of the 10/50 corporation (or any
separate and distinct trade or businesses of any such CFC or
10/50 corporation).
For information on what is an identical change in method of
accounting, see section 15.07(4) of Rev. Proc. 2012-1.

Automatic change requests. Except as otherwise specifically
provided, you must file a Form 3115 under the automatic
change request procedures in duplicate as follows.
• Attach the original to the filer’s timely filed (including
extensions) federal income tax return for the year of change.
• Attach an original filed on behalf of a CFC or 10/50
corporation to the filer’s timely filed federal income tax return for
the tax year of the filer with or within which the CFCs or 10/50
corporation’s year of change tax year ends.
File a copy of the Form 3115 with the IRS National Office,
unless the Appendix of Rev. Proc. 2011-14 or other published
guidance requires you to file the copy with the IRS office in
Ogden, UT, instead of the IRS National Office. File the copy no
earlier than the first day of the year of change and no later than
the date the original is filed with the federal income tax return
for the year of change (or if applicable, for the tax year in which
the CFCs or 10/50 corporation’s year of change tax year ends).
If you are making more than one change in method of
accounting on the same Form 3115 (when permitted) and (1)
one method change requires you to file a copy of the Form
3115 with the IRS Office in Ogden, UT, and (2) the other
method change(s) being requested requires you to file a copy of
Form 3115 with the IRS National Office, file only one copy of
the Form 3115 with the IRS Office in Ogden, UT. However, if
Rev. Proc. 2011-14 or other published guidance describing the
requested change in method of accounting specifically requires
you to file a copy of the Form 3115 with both the IRS National
Office and the IRS office in Ogden, UT, you must file a copy
with each office. See section 3.06 of the Appendix of Rev. Proc.
2011-14 for an example of when published guidance
specifically requires you to file a copy with both offices.
Example: You are requesting consent for a change in
method of accounting described in section 6.01 of the Appendix
of Rev. Proc. 2011-14 and for a concurrent change to a
UNICAP method, as permitted in section 6.01(7)(b) of the
Appendix of Rev. Proc. 2011-14. File the copy of the Form 3115
with the IRS office in Ogden, UT.
In specified circumstances you are required to send
additional copies of the Form 3115 to another IRS address.

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For example, you must file additional copies if the applicant is
under examination, before an Appeals office, and/or before
Federal Court. See section 6.03(c) of Rev. Proc. 2011-14 for
more information. See also Late Application below, and, if the
applicant is under examination for purposes of Rev. Proc.
2011-14, the instructions for Part II, lines 4d and 4e.
Advance consent requests. You must file Form 3115 under
the advance consent request procedures during the tax year for
which the change is requested, unless otherwise provided by
other published guidance. For example, see Regulations
section 1.381(c)(4)-1(d)(2)(iii) and 1.381(c)(5)-1(d)(2)(iii), which
provide different deadlines for filing a Form 3115 in the year of
a section 381 transaction. If the tax year for which the change is
requested is a short period, file Form 3115 by the last day of the
short period unless other published guidance provides another
deadline. File the Form 3115 with the IRS National Office (see
below). File Form 3115 as early as possible during the year of
change to provide adequate time for the IRS to respond prior to
the due date of the filer’s return for the year of change (or if
applicable, for the tax year of the filer in which the CFCs or 10/
50 corporation’s year of change tax year ends). See Late
Application below and, if the applicant is under examination for
purposes of Rev. Proc. 97-27, as modified by Rev. Proc.
2009-39, and Rev. Proc. 2011-14, and the instructions for
Part II, lines 4d and 4e.
The IRS normally sends an acknowledgment of receipt
within 60 days after receiving a Form 3115 filed under the
advance consent request procedures of Rev. Proc. 97-27. If the
filer does not receive an acknowledgment of receipt for an
advance request within 60 days, the filer can inquire to:
Internal Revenue Service, Control Clerk, CC:IT&A, Room
4516, 1111 Constitution Ave., NW, Washington, DC 20224.
Note: The IRS does not send acknowledgments of receipt for
automatic change requests.

is filed for multiple applicants in a consolidated group of
corporations, multiple CFCs, or multiple separate and distinct
trades or businesses of a taxpayer (including QSubs, or
single-member LLCs), attach a schedule listing each applicant
and its identification number (where applicable). This schedule
may be combined with the information requested for Part III,
line 23a (regarding the user fee) and Part IV (section 481(a)
adjustment). If multiple names and signatures are required (for
example, in the case of CFCs — see instructions below), attach
a schedule labeled “SIGNATURE ATTACHMENT” to the Form
3115, signed under penalties of perjury using the same
language as in the declaration on page 1 of Form 3115.
Receivers, trustees, or assignees must sign any Form 3115
they are required to file.
Individuals. If Form 3115 is filed for a husband and wife who
file a joint income tax return, enter the names of both spouses
on the first line and the signatures of both spouses on the
signature line.
Partnerships. Enter the name of the partnership on the first
line of Form 3115. In the signature section, enter the signature
of one of the general partners or limited liability company
members who has personal knowledge of the facts and who is
authorized to sign. Enter that person’s name and title below the
signature. If the authorized partner is a member of a
consolidated group, then an authorized officer of the common
parent corporation with personal knowledge of the facts must
sign.
Non-consolidated corporations, personal service
corporations, S corporations, cooperatives, and insurance
companies. Enter the name of the filer on the first line of Form
3115. In the signature section, enter the signature of the officer
who has personal knowledge of the facts and authority to bind
the filer in the matter. Enter that officer’s name and official title
below the signature.
Consolidated group of corporations. Enter the name of the
common parent corporation on the first line of Form 3115. Also
enter the name(s) of the applicant(s) on the fourth line if a
member of the consolidated group other than, or in addition to,
the parent corporation is requesting a change in method of
accounting. In the signature section, enter the signature of the
officer of the common parent corporation who has personal
knowledge of the facts and authority to bind the common parent
corporation in the matter, and that officer’s name and official
title below the signature.
Separate and distinct trade or business of an entity. Enter
the name of the entity (or common parent corporation if the
entity is a member of a consolidated group) on the first line of
Form 3115. Also enter the name of the separate and distinct
trade or business requesting a change in method of accounting
on the fourth line. In the signature section, enter the signature
of the individual who has personal knowledge of the facts and
authority to bind the separate and distinct trade or business of
the entity in the matter, and that person’s name and official title
below the signature.
CFC or 10/50 Corporation. For a CFC or 10/50 corporation
with a U.S. trade or business, follow the same rules as for other
corporations. For a CFC or 10/50 corporation that does not
have a U.S. trade or business, the Form 3115 filed on behalf of
its controlling domestic shareholder(s) (or common parent)
must be signed by an authorized officer of the designated
(controlling domestic) shareholder that retains the jointly
executed consent as provided for in Regulations section
1.964-1(c)(3)(ii). If there is more than one shareholder, the
statement described in Regulations section 1.964-1(c)(3)(ii)
must be attached to the application. Also, the controlling
domestic shareholder(s) must provide the written notice
required by Regulations section 1.964-1(c)(3)(iii). If the
designated (controlling domestic) shareholder is a member of a
consolidated group, then an authorized officer of the common
parent corporation must sign.
Estates or trusts. Enter the name of the estate or trust on the
first line of Form 3115. In the signature section, enter the
signature of the fiduciary, personal representative, executor,

Late Application
In general, a taxpayer that fails to timely file a Form 3115 will
not be granted an extension of time to file except in unusual
and compelling circumstances. See Regulations section
301.9100-3 for the standards that must be met. For information
on the period of limitations, see section 5.03(2) of Rev. Proc.
2012-1.
However, a limited 6-month extension of time to file Form
3115 may be available for automatic change requests. For
details, see section 6.02(3)(d) of Rev. Proc. 2011-14 and
Regulations section 301.9100-2.
A taxpayer submitting a ruling request for an extension of
time to file Form 3115 must pay a user fee for its extension
request and, in the case of an advance consent request, also a
separate user fee for its accounting method change request.
For the schedule of user fees, see (A)(3)(b), (A)(4), and
(A)(5)(d) in Appendix A of Rev. Proc. 2012-1.

Specific Instructions
Name(s) and Signature(s)
Enter the name of the filer on the first line of page 1 of Form
3115. For an automatic change request, the filer must send a
signed and dated copy of the Form 3115 to the IRS National
Office and/or Ogden, UT, office and, in some cases, to an
additional IRS office. For each of these copies, submit either
the copy with an original signature or a photocopy of the original
signed Form 3115. The Form 3115 attached to the income tax
return (including any additional statements) does not need to be
signed. The name and signature requirements are discussed
below.
In general, the filer of the Form 3115 is the applicant.
However, in circumstances where the Form 3115 is filed on
behalf of the applicant, enter the filer’s name and identification
number on the first line of Form 3115 and enter the applicant’s
name and identification number on the fourth line. If Form 3115

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administrator, etc., who has personal knowledge of the facts
and legal authority to bind the estate or trust in the matter, and
that person’s official title below the signature.

act(s), must be properly reflected on Form 2848. For further
details for an authorized representative and a power of
attorney, see sections 9.03(8) and (9) of Rev. Proc. 2012-1.

Exempt organizations. Enter the name of the organization on
the first line of Form 3115. In the signature section, enter the
signature of a principal officer or other person who has personal
knowledge of the facts and authority to bind the exempt
organization in the matter, and that person’s name and official
title below the signature.

A Form 2848 must be attached to Form 3115 in order for the
Service to discuss a Form 3115 with a taxpayer’s
representative, even if the taxpayer’s representative prepared
and/or signed the Form 3115.

Preparer (other than filer/applicant). If the individual
preparing the Form 3115 is not the filer or applicant, the
preparer also must sign. However, for an automatic change
request, the preparer need not sign the original Form 3115
attached to the income tax return.

A filer that wants to receive, or wants its authorized
representative to receive, correspondence regarding its Form
3115 (for example, additional information letters or the letter
ruling) by fax must attach to the Form 3115 a statement
requesting this service. The attachment must also list the
authorized name(s) and fax number(s) of the person(s) who are
to receive the fax. The listed person(s) must be either
authorized to sign Form 3115, or an authorized representative
of the filer that is included on Form 2848. For further details on
the fax procedures, see section 9.04(3) of Rev. Proc. 2012-1.

Option to Receive Correspondence by Fax

Identification Number
Enter the filer’s taxpayer identification number on the first line of
Form 3115 as follows.
• Individuals enter their social security number (SSN) (or
individual taxpayer identification number (ITIN) for a resident or
nonresident alien). If the Form 3115 is for a husband and wife
who file a joint return, enter the identification numbers of both.
• All others, enter the employer identification number (EIN).
• If the filer is the common parent corporation of a consolidated
group of corporations, enter the EIN of the common parent on
the first line of Form 3115. Enter the EIN of the applicant on the
fourth line if a member of the consolidated group other than, or
in addition to, the common parent is requesting the change in
method of accounting.
• If the common parent is filing the Form 3115 on behalf of
multiple applicants in a consolidated group of corporations,
multiple CFCs or 10/50 corporations, or multiple and distinct
trades or businesses of a member (including QSubs, or
single-member LLCs), attach a schedule listing each applicant
and its identification number (if applicable).
• If the applicant is a foreign entity that is not otherwise
required to have or obtain an EIN, enter “Not applicable” in the
space provided for the identifying number.

Type of Accounting Method Change
Requested
Check the appropriate box described below indicating the type
of change being requested.
• Depreciation or amortization. Check this box for a change
in (a) depreciation or amortization (for example, the
depreciation method or recovery period), (b) the treatment of
salvage proceeds or costs of removal, (c) the method of
accounting for retirements of depreciable property, or (d) the
treatment of depreciable property from a single asset account to
a multiple asset account (pooling), or vice versa).
• Financial products and/or financial activities of financial
institutions. Check this box for a change in the treatment of a
financial product (for example, accounting for debt instruments,
derivatives, mark-to-market accounting, etc.), or in the financial
activities of a financial institution (for example, a lending
institution, a regulated investment company, a real estate
investment trust, a real estate mortgage investment conduit,
etc.)).
• Other. For advance consent requests, check this box if
neither of the above boxes applies to the requested change. In
the space provided, enter a short description of the change and
the most specific applicable Code section(s) for the requested
change (for example, change within section 263A costs;
deduction of warranty expenses, section 461; change to the
completed contract method for long-term contracts, section 460;
etc.). For automatic change requests, this informational
requirement is satisfied by properly completing Part I, line 1 of
Form 3115.

Principal Business Activity Code
If the filer is a business, enter the six-digit principal business
activity (PBA) code of the filer. The principal business activity of
the filer is the activity generating the largest percentage of its
total receipts. See the instructions for the filer’s income tax
return for the filer’s PBA code and definition of total receipts.
Note. An applicant requesting to change its accounting
method under designated automatic accounting method change
numbers 33 and/or 51 in the List of Automatic Accounting
Method Changes must also attach to Form 3115 the detailed
NAICS code for the applicant’s principal business activity. See
Rev. Proc. 2002-28, 2002-1 C.B. 815, for further guidance.

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Address

You must follow the instructions below to correctly
complete Form 3115.

CAUTION

• Applicants requesting a change in method of accounting

Include the suite, room, or other unit number after the street
address. If the Post Office does not deliver mail to the street
address and the filer has a P.O. box, show the box number
instead of the street address.

using the automatic change request procedures must complete
Parts I, II, and IV.
• Applicants requesting a change in method of accounting
using the advance consent request procedures must complete
Parts II, III, and IV.
• All applicants must complete Schedules A, B, C, D, and E, as
applicable, for the requested change in method of accounting.
• If more room is needed to respond to any line, attach a
schedule providing the applicable information and label it with
the line number.
• Attachments submitted with Form 3115 must show the filer’s
name and identification number. Also, indicate that the
information is an attachment to Form 3115.
• Report amounts in U.S. dollars, and if applicable, in the
functional currency with a statement of exchange rates used.

Contact Person
The contact person must be an individual authorized to sign
Form 3115, or the filer’s authorized representative. If this
person is someone other than an individual authorized to sign
Form 3115, you must attach Form 2848, Power of Attorney and
Declaration of Representative.

Form 2848, Power of Attorney and Declaration
of Representative
Authorization to represent the filer before the IRS, to receive a
copy of the requested letter ruling, or to perform any other

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published guidance specifically states that one or more scope
limitation(s) do not apply to the requested change.

Part I—Information For Automatic
Change Request

If any of the scope limitations apply to the requested change
in method of accounting and apply to the applicant, automatic
consent is not available to the applicant for the requested
accounting method change. However, the applicant may be
eligible to request its change under the advance consent
request procedures. See Part III — Information For Advance
Consent Request, later in these instructions to determine if
these procedures apply to the applicant.

Automatic Change Request Scope Limitations
An applicant is not eligible to use the automatic change request
procedures of Rev. Proc. 2011-14 (either in the Appendix or
included by reference in other published guidance) if any of the
following six scope limitations (section 4.02 of Rev. Proc.
2011-14) apply, unless the applicable section of the Appendix
of Rev. Proc. 2011-14 or other published guidance states that
the particular scope limitation does not apply to the applicant’s
requested change. The scope limitations (unless waived) apply
at the time the copy of Form 3115 would be filed with the IRS
National Office or Ogden, UT.
1. The applicant is under examination, except as provided in
section 4.02(1) of Rev. Proc. 2011-14. If the applicant is a CFC
or 10/50 corporation that is not required to file a federal income
tax return, the applicant is under examination if any of its
controlling domestic shareholders is under examination for a
taxable year(s) in which it was a U.S. shareholder of the CFC or
10/50 corporation, except as provided in section 4.02(1) of Rev.
Proc. 2011-14.
2. The applicant is (or was formerly) a member of a
consolidated group that is under examination for a tax year(s)
the applicant was a member of the group. For more information,
see section 4.02(2) of Rev. Proc. 2011-14.
3. The applicant is an entity treated as a partnership or S
corporation and the accounting method to be changed is an
issue under consideration in an examination with respect to a
partner, member, or shareholder of the applicant. For more
information, see section 4.02(3) of Rev. Proc. 2011-14.
4. The applicant engages in a transaction to which section
381(a) applies within the proposed tax year of change. For
more information, including exceptions to this limitation, see
section 4.02(4) of Rev. Proc. 2011-14.
5. The applicant is in the final tax year of its trade or
business as described in sections 4.02(5) and 5.04(3)(c) of
Rev. Proc. 2011-14.
6. The applicant made or applied to make a change in
method of accounting for the same item (or for its overall
method) within the last 5 tax years, including the year of
change. For more information, see section 4.02(6) and 4.02(7)
of Rev. Proc. 2011-14.

Part II—Information For All Requests
Line 3. Ordinarily, the IRS will not consent to a request for a
change in method of accounting for the applicant’s final tax
year. If the applicant ceases to engage in the trade or business
to which the desired change in accounting method relates or
terminates its existence in the year of change, the applicant is
ordinarily not eligible to make the change under automatic
change request procedures unless the applicable section of the
Appendix of Rev. Proc. 2011-14 or other applicable published
guidance states that section 4.02(5) of Rev. Proc. 2011-14 does
not apply to the requested change in method of accounting. If
the change is requested under the advance consent
procedures, the IRS National Office will consider the reasons
for the change in the applicant’s final year (see Part III, line 21)
in determining whether to approve the requested change.
Note: For lines 4a, 4b, 4c, 5a, 5c, and 6, the reference to
“applicant” includes the applicant and any present or former
consolidated group in which the applicant was a member during
the applicable tax year(s). A reference to “applicable tax years”
includes any tax years for which the applicant’s present or
former consolidated group is under examination, before an
Appeals office, and/or before a federal court if the applicant was
a member of the group in those tax years. For each of the
applicable lines (4a, 4b, 4c, 5a, 5c, and/or 6), attach to Form
3115 a list of the beginning and ending dates of the tax year(s)
that the applicant (including its present and former consolidated
group) is under examination, before an Appeals office, and/or
before a Federal court. If the method of accounting the
applicant is requesting to change is an issue either under
consideration, placed in suspense, or pending for any tax year
under examination, or if the method of accounting the applicant
is requesting to change is an issue under consideration by an
Appeals office or by a Federal court, indicate the applicable tax
year(s).

Line 1. Enter the designated automatic accounting method
change number on line 1(a). These numbers may be found in
the List of Automatic Accounting Method Changes, or in
subsequently published guidance. Also see the Appendix of
Rev. Proc. 2011-14. In general, enter a number for only one
change. However, the numbers for two or more changes may
be entered on line 1(a) if specifically permitted in applicable
published guidance. See section 6.02(1)(b) of Rev. Proc.
2011-14.

!

CAUTION

Line 4a. The applicant is under examination if it has a federal
income tax return under examination (including while the
taxpayer has a refund or credit under review by the Joint
Committee on Taxation, and while the taxpayer participates in
the Compliance Assurance Process) on the date the Form 3115
is (or would be) filed. For more information, see sections 3.07
and 4.02(2) of Rev. Proc. 97-27, as modified by Rev. Proc.
2002-19, Rev. Proc. 2009-39, and Rev. Proc. 2011-14; or
sections 3.08 and 4.02(1) of Rev. Proc. 2011-14, as applicable.

Do not enter an Internal Revenue Code section on line
1(a). Enter the applicable change number listed in the
instructions or other applicable published guidance.

Line 4b. The applicant’s method of accounting is an issue
under consideration if the examining agent has given the
applicant (or filer) written notification specifically citing the
treatment of the item as an issue under consideration (or for a
CFC or 10/50 corporation, if any controlling domestic
shareholder receives notification that the treatment of a
distribution or deemed distribution from the foreign corporation,
or the amount of its earnings and profits or foreign taxes
deemed paid is an issue under consideration). For further
details, see section 3.08 of Rev. Proc. 97-27, as modified by
Rev. Proc. 2009-39, and Rev. Proc. 2011-14 , or section 3.09 of
Rev. Proc. 2011-14, as applicable. The applicant’s method of
accounting is an issue placed in suspense if the examining
agent has given the applicant (or filer) written notification that
the issue is placed in suspense. Answering Line 4b satisfies the
requirement in section 6.01(2)(b) or 6.01(3)(b) of Rev. Proc.
97-27, as modified by Rev. Proc. 2009-39, if applicable, to
attach a separate statement.

If the accounting method change is not included in the List of
Automatic Accounting Method Changes or assigned a number
in the published guidance providing the automatic accounting
method change, check the box for line 1(b) and identify the
revenue procedure or other published guidance under which
the automatic accounting method change is being requested.
Line 2. Review the applicable accounting method change
section in the Appendix of Rev. Proc. 2011-14 (rather than Rev.
Proc. 2008 – 52 as indicated on line 2 of Form 3115), or the
procedures in other published guidance, if applicable, to
determine whether the scope limitations of section 4.02 of Rev.
Proc. 2011-14, apply to the specific change in accounting
method requested. In general, the scope limitations of section
4.02 of Rev. Proc. 2011-14 apply to the requested change
unless the Appendix of Rev. Proc. 2011-14 or other applicable

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Line 4c. The applicant’s method of accounting is an issue
pending if the IRS has given the applicant (or filer, or in the
case of a CFC or 10/50 corporation, any controlling domestic
shareholders of a CFC or 10/50 corporation) written notification
indicating that an adjustment is being made or will be proposed
with respect to the applicant’s method of accounting for the tax
year(s) under examination. See section 6.03(6) of Rev. Proc.
2011-14. Attach a copy of this written notification to Form 3115.
For further details, see section 6.01(5) of Rev. Proc. 97-27, as
modified by Rev. Proc. 2002-19, and Rev. Proc. 2009-39, or
section 6.03(6) of Rev. Proc. 2011-14, as applicable.
Line 4d. A filer may request to change a method of accounting
for an applicant that is under examination if the director
consents to the filing of Form 3115. (See section 1.01(3) of
Rev. Proc. 2012-1 for the definition of director.) The director will
consent to the filing of Form 3115 unless, in the opinion of the
director, the method of accounting to be changed would
ordinarily be included as an item of adjustment in the year(s) for
which the applicant is under examination. Submit a request for
the consent of the director to the examining agent. If the
director consents to the filing of Form 3115, attach the consent
to the Form 3115 filed with the IRS National Office or the
Ogden, UT office. Also, submit the director copy of Form 3115
to the examining agent no later than the date the Form 3115 is
filed with the IRS National Office or the Ogden, UT office. When
filing under the automatic change request procedures, attach to
the original Form 3115 (which is attached to the filer’s income
tax return) a written statement certifying that (a) the written
consent was obtained from the director and (b) the applicant will
retain a copy of the consent for inspection by the IRS. For
further details, see section 6.01(4) of Rev. Proc. 97-27, as
modified by Rev. Proc. 2009-39, or section 6.03(4) of Rev.
Proc. 2011-14, as applicable.
Line 4e. The following exceptions apply to the under
examination scope limitations:
• 90-day window period. A Form 3115 may be filed under
Rev. Proc. 97-27 or Rev. Proc. 2011-14 for an applicant under
examination during the first 90 days of any tax year if the
applicant has been under examination for at least 12
consecutive months as of the first day of the tax year. The
90-day window period does not apply if the method the
applicant is requesting to change is an issue under
consideration or placed in suspense by the examining agent.
For further details, including special rules for CFCs and 10/50
corporations, see section 6.01(2) of Rev. Proc. 97-27, as
modified by Rev. Proc. 2009-39, or section 6.03(2) of Rev.
Proc. 2011-14, as applicable.
• 120-day window period. A Form 3115 may be filed under
Rev. Proc. 97-27 or Rev. Proc. 2011-14 for an applicant under
examination during the 120-day period following the date an
examination ends regardless of whether a subsequent
examination has commenced. For the definition of when an
examination ends, see section 3.07 of Rev. Proc. 97-27, as
modified by Rev. Proc. 2009-39 and Rev. Proc. 2011-14, or
section 3.08 of Rev. Proc. 2011-14, as applicable. The 120-day
window period does not apply if the method the applicant is
requesting to change is an issue under consideration or placed
in suspense by the examining agent. Enter the ending date of
the examination that qualifies the applicant to file under the
120-day window. For further details, including special rules for
CFCs and 10/50 corporations, see section 6.01(3) of Rev. Proc.
97-27, as modified by Rev. Proc. 2009-39, or sections 6.03(3)
and 3.08(1)(c) of Rev. Proc. 2011-14, as applicable.
Line 5a. If the applicant has any federal income tax return
before an Appeals office and/or a Federal court, refer to
sections 6.02 and 6.03 of Rev. Proc. 97-27, as modified by Rev.
Proc. 2002-19, Rev. Proc. 2009-39 and Rev. Proc. 2011-14, or
sections 6.04 and 6.05 of Rev. Proc. 2011-14, as applicable.
Line 5c. Except as otherwise provided in IRS published
guidance, an applicant that is requesting to change a method of
accounting that is an issue under consideration by an Appeals
office and/or a Federal court does not receive audit protection
for the requested change. For further details, see sections 6.02
and 6.03 of Rev. Proc. 97-27, as modified by Rev. Proc.

2002-19, Rev. Proc. 2009-39, and Rev. Proc. 2011-14 or
sections 6.04 and 6.05 of Rev. Proc. 2011-14, as applicable.
Line 6. The information requested on line 6 may be provided
in an attachment that includes the information requested on line
4f and/or line 5a, as applicable.
Line 7. If yes is answered to the question on line 7, attach an
explanation. The applicant may not be eligible to make the
change (for example, if the issue is under consideration for a
tax year under examination). If eligible to make the change, the
applicant may not receive audit protection with the change (for
example, if the issue is under consideration for a tax year
before either an Appeals office or a Federal court). See
sections 4.02(6), 6.01, 6.02, and 6.03 of Rev. Proc. 97-27, as
modified by Rev. Proc. 2002-19 and Rev. Proc. 2011-14, or
sections 6.03, 6.04 and 6.05 of Rev. Proc. 2011-14, as
applicable.
Line 8. A taxpayer does not receive audit protection under
certain circumstances described in sections 6.01(5), 6.02, 6.03,
or 9.02 of Rev. Proc. 97-27, as modified by Rev. Proc. 2002-19,
Rev. Proc. 2009-39, Rev. Proc. 2011-14 or in sections
4.02(7)(b), 6.03(5), 6.03(6), 6.04, 6.05, or 7.02 of Rev. Proc.
2011-14. If filing under the automatic change request
procedures, also review the applicable accounting method
change section in the Appendix of Rev. Proc. 2011-14, or the
procedures in other IRS published guidance, if applicable, to
determine if the applicable section of the Appendix of Rev.
Proc. 2011-14 or other available IRS published guidance states
that the applicant does not receive audit protection with the
requested change. If “Yes” is answered to the question on line
8, attach an explanation, including the applicable provision of
Rev. Proc. 97-27, as modified by Rev. Proc. 2002-19, Rev.
Proc. 2009-39 and Rev. Proc. 2011-14, or Rev. Proc. 2011-14,
that prevents audit protection.
Line 9. For further details, see section 9.03(6)(a) of Rev. Proc.
2012-1, and either section 8.05 of Rev. Proc. 97-27 or sections
4.02(6) and 4.02(7) of Rev. Proc. 2011-14, as applicable.
Line 10. For further details, see section 9.03(6)(b) of Rev.
Proc. 2012-1.
Line 12. A special method of accounting for an item is a
method of accounting, other than the cash method or an
accrual method, expressly permitted by the Code, regulations,
or guidance published in the IRB that deviates from the rules of
sections 451 and 461 (and the regulations thereunder) that is
applicable to the taxpayer’s overall method of accounting
(proposed overall method if being changed). For example, the
installment method of accounting under section 453 is a special
method of accounting. See section 14.01(3)(e) of the Appendix
of Rev. Proc. 2011-14 for additional examples of special
methods.
If the applicant prepared a Schedule M-3 with its last filed tax
return or expects to file a Schedule M-3 with its next tax return,
please state whether applicant’s proposed change in method of
accounting for federal income tax purposes is related to the
applicant’s adoption of the International Financial Reporting
Standards (“IFRS”) for financial statement purposes. (Note:
There is a box on Schedule M-3, Part I, line 4, to indicate the
accounting standard used for financial reporting.)
Line 13. For each applicant, including each member of a
consolidated group, each separate and distinct trade or
business of each member of a consolidated group or other
entity (even if the change is for all of a member’s or other
entity’s trades or businesses), and each eligible CFC or 10/50
corporation filing a single Form 3115 requesting the identical
accounting method change, attach (i) a schedule describing its
trade(s) or business(es) for each separate and distinct trade or
business, including any QSub or single-member LLC, and (ii)
the Principal Business Activity code. For guidance on what is a
separate and distinct trade or business, see Regulations
section 1.446-1(d). For each trade or business, use the most
specific Principal Business Activity code listed in the
instructions for the applicant’s federal tax return (or the filer’s
federal tax return, if applicable).

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• The filer is permitted to file a single Form 3115 for multiple

Line 14. Insurance companies must also state whether the
proposed method of accounting will be used for annual
statement accounting purposes.
Line 16. For details on requesting and scheduling a
conference, see sections 9.04(4) and 10 of Rev. Proc. 2012-1.

applicants. See Who Must File, earlier. The filer must pay a
separate user fee for each applicant. For each Form 3115
requesting an identical change in method of accounting, the filer
pays the regular user fee in section (A)(3)(b) (or the reduced
user fee in section (A)(4), if applicable) of Appendix A of Rev.
Proc. 2012-1 for the first applicant and the lesser user fee in
section (A)(5)(b) of Appendix A of Rev. Proc. 2012-1 for each
additional applicant.
Example 1. The filer is the common parent of a
consolidated group of corporations. The parent is filing a Form
3115 on behalf of itself and 3 other members of the
consolidated group. The parent is engaged in one trade or
business. The 3 other included member corporations are
engaged in one trade or business each. All the trades or
businesses are requesting an identical change in method of
accounting. There are 4 applicants for the Form 3115. The filer
must submit the regular user fee in section (A)(3)(b) (or the
reduced fee in section (A)(4), if applicable) of Appendix A of
Rev. Proc. 2012-1 for the first applicant (that is, the common
parent) and the lesser user fee in section (A)(5)(b) of Appendix
A of Rev. Proc. 2012-1 for each of the other 3 applicants (that
is, the 3 other members of the consolidated group).
Example 2. The filer is the common parent of a
consolidated group of corporations. The parent is filing a Form
3115 on behalf of itself and 3 other members of the
consolidated group. The parent is engaged in one trade or
business. Each of the 3 other included member corporations
are engaged in two trades or businesses. All of the trades or
businesses are requesting an identical change in method of
accounting. There are 7 applicants for the Form 3115. The filer
must submit the regular user fee in section (A)(3)(b) (or the
reduced fee in section (A)(4), if applicable) of Appendix A of
Rev. Proc. 2012-1 for the first applicant (that is, the parent’s
trade or business) and the lesser user fee in section (A)(5)(b) of
Appendix A of Rev. Proc. 2012-1 for each of the 6 applicants
(that is the other 6 trades or businesses of the 3 other
consolidated group members).
Example 3. The filer is the common parent of a
consolidated group of corporations. Another member of the
consolidated group is the controlling domestic shareholder of a
CFC that does not engage in a trade or business within the
United States. The CFC has 4 separate and distinct trades or
businesses, all requesting an identical change in method of
accounting. The filer is the common parent of the consolidated
group. There are 4 applicants for the Form 3115. The filer must
submit the regular user fee in section (A)(3)(b) (or the reduced
fee in section (A)(4), if applicable) of Appendix A of Rev. Proc.
2012-1 for the first applicant (that is, the first trade or business
of the CFC) and the lesser user fee in section (A)(5)(b) of
Appendix A of Rev. Proc. 2012-1 for each of the 3 other
applicants (that is, the other 3 trades or businesses of the
CFC). Note. Because the filer is not changing its accounting
method, it does not pay a fee on the account of itself.
For information on user fees for tax-exempt organizations,
see Rev. Proc. 2012-8, 2012-1 I.R.B. 235 (or its successor).
The user fee (check or money order payable to the Internal
Revenue Service) must be attached to any Form 3115 filed
under Rev. Proc. 97-27 that is filed with the IRS National Office.

Part III—Information For Advance
Consent Request
Advance Consent Request Scope Limitations
An applicant may not use the advance consent request
procedures if any of the following four scope limitations apply at
the time the Form 3115 would be filed with the IRS National
Office. See Rev. Proc. 97-27, as modified by Rev. Proc.
2002-19, Rev. Proc. 2009-39, and Rev. Proc. 2011-14.
1. The change in accounting method is required to be made
according to a published automatic change procedure, such as
Rev. Proc. 2011-14. For more information, see section 4.02(1)
of Rev. Proc. 97-27.
2. The applicant is under examination, except as provided in
section 4.02(2) of Rev. Proc. 97-27, as modified by Rev. Proc.
2002-19, Rev. Proc. 2009-39, and Rev. Proc. 2011-14.
3. The applicant is (or was formerly) a member of a
consolidated group that is under examination, or before an
Appeals office, or before a Federal court for the tax year(s) the
applicant was a member of the group. For more information,
see section 4.02(5) of Rev. Proc. 97-27, as modified by Rev.
Proc. 2009-39.
4. In the case of a partnership or S corporation, the
accounting method the applicant is requesting to change is an
issue under consideration in an examination, or by an Appeals
office, or before a Federal court with respect to a partner,
member, or shareholder of the applicant. For more information,
see section 4.02(6) of Rev. Proc. 97-27, as modified by Rev.
Proc. 2009-39.
Line 18. If the requested change is covered by an automatic
change request procedure, and that procedure applies to the
applicant for the requested year of change, the applicant is not
eligible to file an advance consent request. If the requested
change is covered by an automatic change request procedure,
attach an explanation describing why the applicant is eligible to
file a request under advance consent request procedures.
Line 19. For further details on what is to be included in the
attachment, see sections 9.03(1) (facts and other information),
9.03(4) (analysis of material facts), 7.01(8) and 9.03(1)
(statement of supporting authorities), 9.03(2) (statement of
contrary authorities), and 9.03(7) (statement identifying pending
legislation) of Rev. Proc. 2012-1.
Line 20. Attach true copies of all contracts, agreements, and
other documents directly related to the proposed change in
method of accounting. See section 9.03(3) of Rev. Proc.
2012-1.
Line 21. For further details on what is to be included in the
attachment, see section 7.01(1)(d) and 9.03(1) of Rev. Proc.
2012-1.
Line 23. Taxpayers filing under the advance consent request
procedures must pay a user fee for each Form 3115 and for
each applicant, if applicable. See section 15 and Appendix A of
Rev. Proc. 2012-1.
Note: Taxpayers filing under an automatic change request
procedure do not pay a user fee.

Part IV—Section 481(a) Adjustment
Line 24. Ordinarily, an adjustment under section 481(a) is
required for changes in method of accounting. However, for
certain changes in method of accounting, the taxpayer must
make the change on a cut-off basis. In those cases, there is no
section 481(a) adjustment.
If the accounting method change is an automatic accounting
method change in functional currency under section 985 (see
section 29.01 of the Appendix to Rev. Proc. 2011-14), the
adjustments required under Regulations section 1.985-5 must
be made on the last day of the taxable year ending before the
year of change. Any gain or loss that is not required to be
recognized under Regulations section 1.985-5 is not subject to

The applicable user fee must accompany each Form 3115
filed with the National Office under Rev. Proc. 97-27. The user
fee for a Form 3115 is the regular user fee provided in section
(A)(3)(b) of Appendix A of Rev. Proc. 2012-1, unless one (or
both) of the following exceptions apply:
• The filer qualifies for a reduced user fee provided in section
(A)(4) of Appendix A of Rev. Proc. 2012-1 because the filer has
gross income less than the specified amount. For the definition
of gross income, see sections (B)(2), (3), and (4) in Appendix A
of Rev. Proc. 2012-1.

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Schedule A—Change in Overall Method
of Accounting

section 481. Attach a schedule showing the adjustment
required under Regulations section 1.985-5. The schedule
should include the amount of the adjustment required pursuant
to Regulations section 1.985-5, a summary of the computation
of such adjustment, and an explanation of any other
adjustments required by Regulations section 1.985-5.

Part I—Change in Overall Method
All applicants filing to change their overall method of accounting
must complete Schedule A, Part I, including applicants filing
under designated automatic accounting method change
numbers 32, 33, 34, 122, 123, 126, 127, and 128 in the List of
Automatic Accounting Method Changes.

Line 25. In computing the net section 481(a) adjustment, a
taxpayer must take into account all relevant accounts. For some
changes (for example, a change that effects multiple accounts),
the section 481(a) adjustment is a net section 481(a)
adjustment. See example 2, below, and the example in
Schedule A, Part 1, line 1h, later.

Lines 1a through 1g. Enter the amounts requested on lines
1a through 1g, even though the calculation of some amounts
may not have been required in determining taxable income due
to the applicant’s present method of accounting.

Attach a schedule showing the (net) section 481(a)
adjustment for each change in method of accounting for each
applicant included in the Form 3115. Include a summary of how
the (net) section 481(a) adjustment was computed and an
explanation of the methodology used to determine it. The
summary of computation and explanation must be sufficient to
demonstrate that the (net) section 481(a) adjustment is
computed correctly. If the applicant is a CFC or 10/50
corporation, or a trade or business of a CFC or 10/50
corporation, and if its functional currency is not the U.S. dollar,
state the (net) section 481(a) adjustment in that functional
currency. This schedule may be combined with the information
requested on the fourth line on page 1 (list of applicants and
their identification numbers) and on line 23 (user fee).

Note: Do not include amounts that are not attributable to the
change in method of accounting, such as amounts that correct
a math or posting error or errors in calculating tax liability. In
addition, for a bank changing to an overall cash/hybrid method
of accounting, do not include any amounts attributable to a
special method of accounting (as described in section
14.12(2)(b) of the Appendix of Rev. Proc. 2011-14 — automatic
change number 127).
Line 1b. Enter amounts received or reported as income in a
prior year that were not earned as of the beginning of the year
of change. For example, an advance payment received in a
prior year for goods that were not delivered by the beginning of
the year of change may be reported upon delivery if the
taxpayer qualifies under Regulations section 1.451-5. If any
amounts entered on line 1b are for advance payments,
complete Schedule B.

Example 1. Under its present method, XYZ Corporation is
deducting certain costs that are required to be capitalized into
inventory under section 263A. XYZ Corporation is proposing to
change its method of accounting to properly capitalize such
costs. The computation of the section 481(a) adjustment with
respect to the change in method of accounting is demonstrated
as follows:
Beginning inventory for year of change under
proposed method . . . . . . . . . . . . . . . . . . . . . . .
Beginning inventory for year of change under
present method . . . . . . . . . . . . . . . . . . . . . . . .
Section 481(a) adjustment (positive) . . . . . . . . . . . .

Line 1h. Enter the net amount, which is the net section 481(a)
adjustment, on line 1h. Also, enter the net section 481(a)
adjustment on page 3, Part IV, line 25.
The following example illustrates how an applicant calculates
the section 481(a) adjustment when changing to an accrual
method, a nonaccrual-experience method, and the recurring
item exception.

$120,000
100,000
$ 20,000

Example. ABC Corporation, a calendar year taxpayer using
the cash method of accounting, has the following items of
unreported income and expense on December 31, 2010.

Example 2. WXY Corporation, a calendar year taxpayer, is
a producer and capitalizes costs that are required to be
capitalized into inventory under section 263A. Each February,
WXY Corporation pays a salary bonus to each employee who
remains in its employment as of January 31 for the employee’s
services provided in the prior calendar year. Under its present
method, WXY Corporation treats these salary bonuses as
incurred in the tax year the employee provides the related
services. For 2011, WXY Corporation proposes to change its
method of accounting to treat salary bonuses as incurred in the
tax year in which all events have occurred that establish the fact
of the liability to pay the salary bonuses and the amount of the
liability can be determined with reasonable accuracy, pursuant
to section 19.01(2) of the Appendix of Rev. Proc. 2011-14. The
computation of WXY Corporation’s net section 481(a)
adjustment for the change in method of accounting for salary
bonuses is demonstrated as follows:

Accrued income . . . . . . . . . . . . . . . . . . . . . . . .
Uncollectible amounts based on
the nonaccrual-experience method . . . . . . . . .
Accrued amounts properly
deductible (economic performance has occurred)
Expenses eligible for recurring item
exception . . . . . . . . . . . . . . . . . . . . . . . . . .

....

$250,000

....

50,000

....

75,000

....

5,000

ABC Corporation changes to an overall accrual method, a
nonaccrual-experience method, and the recurring item
exception for calendar year 2011. The section 481(a)
adjustment is calculated as of January 1, 2011, as follows.
Accrued income . . . . . . . . . . . . . . . . . . . . . . .

$250,000

Less:

Salary bonuses treated as incurred under the
present method, but not incurred under the
proposed method . . . . . . . . . . . . . . . . . . . . .
$40,000
Beginning inventory as of Jan. 1, 2011, with
capitalized salary bonuses computed under the
present method . . . . . . . . . . . . . . . . . . . . . . $100,000
Beginning inventory as of Jan. 1, 2011, with
capitalized salary bonuses, computed under the
proposed method . . . . . . . . . . . . . . . . . . . . . . .
92,000
Decrease in beginning inventory as of Jan. 1, 2011
(8,000)
Net section 481(a) adjustment (positive) . . . . . . .
$32,000

Uncollectible amount . . . . . . . . . . . . . . . . . . .

50,000

Net income accrued but not received . . . . . . . . .

$200,000

Less:
Accrued expenses . . . . . . . . . . . . . . . . . . . . .

75,000

Expenses deducted as recurring item . . . . . . . .

5,000

Total expenses accrued but not paid . . . . . . . . .

80,000

Section 481(a) adjustment . . . . . . . . . . . . . . .

$120,000

Line 2. If an applicant is requesting to use the recurring item
exception (section 461(h)(3)), the section 481(a) adjustment
must include the amount of the additional deduction that results
from using the recurring item exception.

Line 26. See section 7.03(1) of Rev. Proc. 97-27, as modified
by Rev. Proc. 2002-19, or section 5.04(3)(a) of Rev. Proc.
2011-14, as applicable.

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Schedule D—Change in the Treatment of
Long-Term Contracts Under Section 460,
Inventories, or Other Section 263A
Assets

Part II—Change to the Cash Method For
Advance Consent Request
Limits on cash method use. Except as provided below, C
corporations and partnerships with a C corporation as a partner
may not use the cash method of accounting. Tax shelters, also,
are precluded from using the cash method. For this purpose, a
trust subject to tax on unrelated business income under section
511(b) is treated as a C corporation with respect to its unrelated
trade or business activities.

Part I—Change in Reporting Income
From Long-Term Contracts
Line 2a. Under section 460(f), the term long-term contract
means any contract for the manufacture, building, installation,
or construction of property that is not completed in the tax year
in which it is entered into. However, a manufacturing contract
will not qualify as long-term unless the contract involves the
manufacture of (a) a unique item not normally included in
finished goods inventory or (b) any item that normally requires
more than 12 calendar months to complete.

The limit on the use of the cash method under section 448
does not apply to:
1. Farming businesses as defined in section 448(d)(1).
2. Qualified personal service corporations as defined in
section 448(d)(2).
3. C corporations and partnerships with a C corporation as
a partner if the corporation or partnership has gross receipts of
$5 million or less. See section 448(b)(3) and (c) to determine if
the applicant qualifies for this exception.

Generally, long-term contracts that do not meet the
exceptions under section 460(e) must be accounted for using
the percentage of completion method. See section 460 and the
related regulations.
Line 2b. To qualify for the contract exceptions under section
460(e), the contract must be:
1. A home construction contract as defined in section
460(e)(6)(A), or
2. Any other construction contract entered into by the
applicant if, at the time the contract is entered into, it is
expected to be completed within 2 years and the applicant’s
average annual gross receipts determined under section
460(e)(2) for the 3-year period preceding the tax year the
contract was entered into did not exceed $10 million.

For farming corporations and partnerships with a C
corporation as a partner, see section 447 for limits on the use of
the cash method.
Use of the cash method is also limited under Regulations
sections 1.471-1 and 1.446-1(c)(2)(i) if the applicant purchases,
produces, or sells merchandise that is an income-producing
factor in its business. However, for exceptions to this limitation,
see section 14.03 in the Appendix of Rev. Proc. 2011-14.

Schedule B—Change to the Deferral
Method for Advance Payments

Line 4b. Under the simplified cost-to-cost method, only certain
costs are used in determining both (a) costs allocated to the
contract and incurred before the close of the tax year and
(b) estimated contract costs. These costs are: (1) direct material
costs; (2) direct labor costs; and (3) allowable deductions for
depreciation, amortization, and cost recovery allowances on
equipment and facilities directly used to construct or produce
the subject matter of the long-term contract. See Regulations
section 1.460-5(c).

In general, advance payments must be included in gross
income in the tax year of receipt for federal income tax
purposes. However, an applicant may be entitled to defer the
inclusion in income of certain advance payments, as defined in
section 4.01 of Rev. Proc. 2004-34, 2004-1 C.B. 991, or in
Regulations section 1.451-5(a)(1).
Line 1. Rev. Proc. 2004-34, as modified by Rev. Proc.
2011-18, 2011-5 I.R.B. 443 allows applicants using an accrual
method, in certain circumstances, to defer the inclusion in
income of advance payments to the next tax year. Applicants
requesting to change to the Deferral Method for allocable
payments described in section 5.02(4)(a) of Rev. Proc. 2004-34
(other than allocable payments described in section 5.02(4)(c)
of Rev. Proc. 2004-34) or for payments for which a method
under section 5.02(3)(b)(i) or (iii) of Rev. Proc. 2004-34 applies,
must file under the advance consent procedures of Rev. Proc.
97-27. All other applicants generally must file under the
automatic change procedures of Rev. Proc. 2011-14 (rather
than Rev. Proc. 2008-52, as indicated on line 1b of Form 3115).

Part II—Change in Valuing Inventories Including
Cost Allocation Changes
If the applicant is currently using a LIFO inventory method or
submethod and is changing to another LIFO inventory method
or submethod, Schedule D, Part II is not applicable. Use
Schedule C, Changes Within the LIFO Inventory Method.
Line 3. If an applicant is subject to, but not in compliance with,
section 263A, generally on the same Form 3115 the applicant
must first comply with section 263A before changing an
inventory valuation method. The applicant must complete
Schedule D, Part III, Method of Cost Allocation. For exceptions,
see Regulations section 1.263A-7(b)(2).
Line 5a. If the applicant properly elected the LIFO inventory
method but is unable to furnish a copy of Form(s) 970,
Application to Use a LIFO Inventory Method, attach the
following statement to Form 3115:
“I certify that to the best of my knowledge and belief (name
of applicant) properly elected the LIFO inventory method by
filing Form 970 with its return for the tax year(s) ended (insert
date(s)) and otherwise complied with the provisions of section
472(d) and Regulations section 1.472-3.”
Line 5c. Attach the two statements required by section
22.01(5) in the Appendix of Rev. Proc. 2011-14 (rather than
Rev. Proc. 2008-52, as indicated on line 5c of Form 3115).

Line 2. Regulations section 1.451-5 allows applicants using an
accrual method, in certain circumstances, to defer the inclusion
in income of advance payments for goods or items in
accordance with the applicant’s financial reports.

Schedule C—Changes Within the LIFO
Inventory Method
Use this schedule to request a change from one LIFO inventory
method or submethod to another LIFO inventory method or
submethod. All applicants changing within the LIFO inventory
method or submethods must complete Part I. Complete Part II
only if applicable.

Part I—General LIFO Information

Part III—Method of Cost Allocation

Line 6. Applicants changing to the IPIC method must use this
method for all LIFO inventories. This includes applicants
requesting designated automatic accounting method change
numbers 61 or 62 in the List of Automatic Accounting Method
Changes, later.

Applicants requesting to change their method of accounting for
any property (produced or acquired for resale) subject to
section 263A or any long-term contracts as described in section
460 must complete this schedule.

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If the change is for noninventory property that is subject to
section 263A, attach a detailed description of the types of
property involved.

6. To change a useful life under section 167 (except for a
change to or from a useful life, recovery period, or amortization
period that is specifically assigned by the Code, the regulations,
or other published guidance).

There are several methods available for allocating and
capitalizing costs under section 263A, and for allocating and,
where appropriate, capitalizing costs properly allocable to
long-term contracts. A change to or from any of these methods
is a change in accounting method that requires IRS consent.
Using the applicable regulations and notice listed below, the
applicant should verify which methods are presently being used
and the proposed methods that will be used before completing
Schedule D, Part III. These methods are as follows:

List of Automatic Accounting Method
Changes
Listed below are automatic accounting method changes
providing for the filing of Form 3115. This list includes
regulatory automatic changes, changes provided for in the
Appendix of Rev. Proc. 2011-14, and automatic changes
provided for in other guidance. These automatic changes may
be modified or supplemented with additional automatic changes
by subsequently published guidance.
The list provides a brief description of the automatic changes
in method of accounting made using Form 3115. A
filer/applicant may not rely on the list or the descriptions of
accounting method changes in the list as authority for making
an accounting method change. A filer/applicant that is within the
scope of, and complies with, all the applicable provisions of the
published guidance that authorizes each listed change may rely
on the applicable published guidance as authority for its
automatic accounting method change. If any information in the
list conflicts with published guidance, the published guidance
applies. Each automatic method change described in the
Appendix of Rev. Proc. 2011-14, as modified, contains a
contact person you may call if you need additional information
concerning the change (not a toll-free call).
Each item in the list below:
• Designates an automatic accounting method change number
for each change for entry on line 1a of Form 3115.
• Briefly describes the accounting method change and its
primary Code section(s).
• Indicates in some cases which schedules of Form 3115 to
complete.
• Provides a reference to the basic published guidance (for
example, revenue procedure) that provides for the automatic
change, which filers should review prior to completing Part I,
Information For Automatic Change Request, on page 1 of
Form 3115.
1. Commodity Credit Corporation loans (section
77) — for loans received from the Commodity Credit
Corporation, from including the loan amount in gross income
for the tax year in which the loan is received to treating the loan
amount as a loan. See section 2.01 in the Appendix of Rev.
Proc. 2011-14.
2. Lawyers handling cases on a contingent fee basis
(section 162) — from treating advances of money to their
clients for litigation costs as deductible business expenses to
treating those advances as loans. See section 3.01 in the
Appendix of Rev. Proc. 2011-14.
3. ISO 9000 costs (section 162) — to treating the costs as
deductible, except to the extent they result in the creation or
acquisition of an asset having a useful life substantially beyond
the tax year. See section 3.02 in the Appendix of Rev. Proc.
2011-14.
4. Restaurant smallwares costs (section 162) — to the
smallwares method described in Rev. Proc. 2002-12, 2002-1
C.B. 374 (that is, as materials and supplies that are not
incidental under Regulations section 1.162-3). See section 3.03
in the Appendix of Rev. Proc. 2011-14.
5. Bad debts (section 166) — for an applicant other than a
bank, from accounting for bad debts using a reserve or other
improper method to a specific charge-off method that complies
with section 166. See section 4.01 in the Appendix of Rev.
Proc. 2011-14.
6. Bad debt conformity for banks (section 166) — for
banks other than new banks, to the method that conforms to
Regulations section 1.166-2(d)(3) for the first time the bank
makes this change, or to involuntarily revoke this method. This
change does not fall under the procedures of Rev. Proc.
2011-14. Instead, see Regulations section 1.166-2(d)(3).

1. Allocating Direct and Indirect Costs

• Specific identification method — Regulations sections

1.263A-1(f)(2) and 1.460-5.
• Burden rate method — Regulations sections 1.263A-1(f)(3)(i)
and 1.460-5.
• Standard cost method — Regulations sections
1.263A-1(f)(3)(ii) and 1.460-5.
• Any other reasonable allocation method — Regulations
sections 1.263A-1(f)(4) and 1.460-5.

2. Allocating Mixed Service Costs

• Direct reallocation method — Regulations section

1.263A-1(g)(4)(iii)(A).
• Step-allocation method — Regulations section
1.263A-1(g)(4)(iii)(B).
• Simplified service cost method:
Using the labor-based allocation ratio — Regulations section
1.263A-1(h)(4).
Using the production cost allocation ratio — Regulations
section 1.263A-1(h)(5).
• Any other reasonable allocation method — Regulations
section 1.263A-1(f)(4).

3. Capitalizing Additional Section 263A Costs

• Simplified production method:

Without historic absorption ratio election — Regulations
section 1.263A-2(b)(3).
With historic absorption ratio election — Regulations section
1.263A-2(b)(4).
• Simplified resale method:
Without historic absorption ratio election — Regulations
section 1.263A-3(d)(3).
With historic absorption ratio election — Regulations section
1.263A-3(d)(4).
• U.S. ratio method — Notice 88-104, 1988-2 C.B. 443.
• Any other reasonable allocation method — Regulations
section 1.263A-1(f)(4) (including the methods listed above
under Allocating Direct and Indirect Costs).

Schedule E—Change in Depreciation or
Amortization
All applicants requesting to change their method of depreciation
or amortization must complete Schedule E of Form 3115.
Applicants changing their method of accounting for depreciation
or amortization under the automatic change request procedures
should see the depreciation changes in the List of Automatic
Accounting Method Changes below.
Do not file Form 3115:
1. To make an election under sections 167, 168, 179, 1400I,
1400L(b), 1400L(c), or 1400N(d), or former section 168;
2. To revoke an election made under one of those sections;
3. To make or revoke an election under section 13261(g)(2)
or (3) of the Revenue Reconciliation Act of 1993 (relating to
section 197 intangibles);
4. To change the placed-in-service date;
5. To change the salvage value (except for a change in
salvage value to zero when the salvage value is expressly
treated as zero by the Code, the regulations, or other published
guidance); or

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7. Depreciation or amortization (impermissible)
(sections 56, 167, 168, 197, 1400I, 1400L, 1400N, and former
section 168) — from an impermissible method to a permissible
method for changes allowed under Regulations section
1.446-1(e)(2)(ii)(d), and for depreciable property owned at the
beginning of the year of change. Complete Schedule E of Form
3115. An applicant changing its method of accounting for
depreciation because of a change described in designated
automatic accounting method change number 10 (sale or lease
transactions) must file Form 3115 according to the designated
automatic accounting method change number 10. See section
6.01 in the Appendix of Rev. Proc. 2011-14.
8. Depreciation (permissible) (sections 56 and
167) — from a permissible method to another permissible
method listed in section 6.02 in the Appendix of Rev. Proc.
2011-14. Complete Schedule E of Form 3115. See section 6.02
in the Appendix of Rev. Proc. 2011-14.
9. Obsolete.
10. Sale, lease or financing transactions (sections 61,
162, 167, 168, and 1012) — from treating property as sold,
leased or, financed to another permissible method described in
section 6.03 in the Appendix of Rev. Proc. 2011-14. See
section 6.03 in the Appendix of Rev. Proc. 2011-14.
11. Modern golf course greens (sections 167, 168, and
former section 168) — either to capitalization of land
preparation costs undertaken in the construction of modern golf
course greens that are closely associated with depreciable
assets or to the addition to basis of land for earth moving costs
inextricably associated with the land. Complete Schedule E of
Form 3115. See Rev. Rul. 2001-60, 2001-2 C.B. 587, and
section 6.04 in the Appendix of Rev. Proc. 2011-14.
12. Original and replacement tire costs (section 168) — for
qualifying vehicles, to the original tire capitalization method
provided in Rev. Proc. 2002-27, 2002-1 C.B. 802. Complete
Schedule E of Form 3115. See section 6.05 in the Appendix of
Rev. Proc. 2011-14.
13. Depreciation of gas pump canopies (sections 167,
168, and former section 168) — for depreciation of certain
stand-alone gasoline pump canopies and their supporting
concrete footings, to classifying the gasoline pump canopies in
asset class 57.1 of Rev. Proc. 87-56, 1987-2 C.B. 674, and to
classifying the supporting concrete footings in asset class 57.1
of Rev. Proc. 87-56. Complete Schedule E of Form 3115. See
section 6.06 in the Appendix of Rev. Proc. 2011-14.
14. Depreciation of utility assets (sections 167, 168, and
former section 168) — for depreciation of assets owned by a
utility used in general business operations, to classifying assets
under Rev. Proc. 87-56,1987-2 C.B. 674, to conform with Rev.
Rul. 2003-81, 2003-2 C.B. 126. Complete Schedule E of Form
3115. See section 6.07 in the Appendix of Rev. Proc. 2011-14.
15. Depreciation of cable TV fiber optics (sections 167
and 168) — for depreciation of fiber optic node and trunk line of
a cable television distribution system, to the safe harbor
method in Rev. Proc. 2003-63, 2003-2 C.B. 304, for classifying
the unit of property either as providing one-way communication
services or two-way communication services. Complete
Schedule E of Form 3115. See section 6.08 in the Appendix of
Rev. Proc. 2011-14.
16. Amortizable bond premium (section 171) — from
amortizing bond premium to not amortizing the premium
(revoking the section 171(c) election). See section 5.01 in the
Appendix of Rev. Proc. 2011-14.
17. Research and experimental expenditures (section
174) — from the capitalization method to another permissible
method, from the expense method to another permissible
method, from the deferred expense method to another
permissible method, or from the current period of amortization
to a different period of amortization under the deferred expense
method. See section 7.01 in the Appendix of Rev. Proc.
2011-14.
18. Computer software expenditures (sections 162 and
167) — for costs of developed, acquired, leased or licensed
computer software, to deductible expenses or capital
expenditures and amortization (for developed software), to
capital expenditures and depreciation or amortization (for

acquired computer software), or to deductible expenses under
Regulations section 1.162-11 (for leased or licensed computer
software). Complete Schedule E of Form 3115 for changes
relating to acquired computer software or developed computer
software if the change is to capital expenditures and
amortization. See section 9.01 in the Appendix of Rev. Proc.
2011-14.
19. Package design costs (section 263) — to the
capitalization method, to the design-by-design capitalization
and 60-month amortization method, or to the pool-of-cost
capitalization and 48-month amortization method. See section
10.01 in the Appendix of Rev. Proc. 2011-14.
20. Line pack gas or cushion gas costs (section 263) — to
treating the costs as capital expenditures, the costs of
recoverable amounts as not depreciable, and the costs of
unrecoverable amounts as depreciable. A taxpayer that
changes its method for the costs of unrecoverable amounts
also must change to a permissible method of depreciation for
those costs. Complete Schedule E of Form 3115 for changes
relating to the costs of unrecoverable amounts. See section
10.02 in the Appendix of Rev. Proc. 2011-14.
21. Removal costs (section 263) — for certain costs
incurred in the retirement and removal of depreciable assets, to
a method that conforms with Rev. Rul. 2000-7, 2000-1 C.B.
712. See section 10.03 in the Appendix of Rev. Proc. 2011-14.
22. Certain uniform capitalization methods used by
resellers and reseller-producers (section 263A) — for
qualifying applicants, to a qualifying method or methods.
Complete Schedule D, Parts II and III, of Form 3115. See
section 11.01 in the Appendix of Rev. Proc. 2011-14.
23. Certain uniform capitalization methods used by
producers and reseller-producers (section 263A) — for
qualifying applicants, to a qualifying method or methods.
Complete Schedule D, Parts II and III, of Form 3115. See
section 11.02 in the Appendix of Rev. Proc. 2011-14.
24. Research and experimental expenditures under
uniform capitalization methods (section 263A) — from
capitalizing research and experimental expenditures to
inventory to no longer capitalizing these costs to inventory.
Complete Schedule D, Part II, of Form 3115, as applicable. See
section 11.03 in the Appendix of Rev. Proc. 2011-14.
25. Impact fees (section 263A) — for impact fees incurred in
connection with the new construction or expansion of a
residential building, to treating the costs as capital expenditures
allocable to the building. Complete Schedule E of Form 3115 if
the building is depreciable. See section 11.04 in the Appendix
of Rev. Proc. 2011-14.
26. Related party transactions (section 267) — for losses,
expenses, and qualified stated interest incurred in transactions
between related parties, to disallowing or deferring certain
deductions attributable to such transactions in accordance with
section 267. See section 12.01 in the Appendix of Rev. Proc.
2011-14.
27. Deferred compensation determination (section
404) — for determining whether an item of compensation is
deferred compensation or when the item is paid, from making
the determination by reference to when the item is secured to
making the determination by reference to when the item is
actually received. See section 13.01 in the Appendix of Rev.
Proc. 2011-14.
28. Bonus or vacation pay deferred compensation
(section 404) — for bonuses that are deferred compensation,
from treating as deductible or capitalizable when accrued, to
treating as deductible or capitalizable in the year in which
includible in the employee’s income, and for vacation pay that is
deferred compensation, from treating as deductible or
capitalizable when accrued to treating as deductible or
capitalizable in the year in which paid to the employee. See
section 13.02 in the Appendix of Rev. Proc. 2011-14.
29. Grace period contributions (section 404) — for
contributions made to a section 401(k) qualified cash or
deferred arrangement or matching contributions under section
401(m), from treating contributions made after the end of the
tax year but before the due date of the tax return as being on
account of the tax year without regard to when the underlying

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compensation is earned to treating such contributions as not
being on account of the tax year if they are attributable to
compensation earned after the end of that tax year. See section
13.03 in the Appendix of Rev. Proc. 2011-14.
30. Obsolete.
31. Multi-year insurance policies for multi-year service
warranty contracts (section 446) — for a manufacturer,
wholesaler, or retailer of motor vehicles or other durable
consumer goods accounting for multi-year insurance policies for
multi-year service warranty contracts, to capitalizing and
amortizing the costs. See section 14.02 in the Appendix of Rev.
Proc. 2011-14.
32. Overall cash method ($1 million) (section 446) — for
qualifying applicants changing to the overall cash method.
Complete Schedule A, Part I, of Form 3115. Also, complete
Schedule D, Parts II and III, as applicable. See section 14.03 in
the Appendix of Rev. Proc. 2011-14.
33. Overall cash method ($10 million) (section 446) — for
qualifying applicants changing to the overall cash method.
Complete Schedule A, Part I, of Form 3115. Also, complete
Schedule D, Parts II and III, as applicable. See section 14.03 in
the Appendix of Rev. Proc. 2011-14.
34. Overall accrual method (section 448) — for an applicant
required by section 448 to change from the cash method for its
first section 448 year to an overall accrual method that does not
meet the scope requirements of Rev. Proc. 2011-14. Complete
Schedule A, Part I, of Form 3115. Also, complete Schedule D,
Parts II and III, as applicable. This change does not fall under
the procedures of Rev. Proc. 2011-14. Instead, see Regulations
section 1.448-1. (See automatic method change 123 for
taxpayers within the scope of Rev. Proc. 2011-14).
35. Nonaccrual-experience method (section 448) — for an
applicant changing: to a safe harbor method provided in section
1.448-2(f)(1) (the revenue-based moving average method),
(f)(2) (the actual experience method), (f)(3) (the modified Black
Motor method), (f)(4) (the modified moving average method), of
(f)(5) (the alternative nonaccrual-experience method); to a
periodic system; from a NAE method to a specific charge-off
method; from a sub-method of its current NAE method
provided in section 1.448-2 regarding applicable periods to
another sub-method regarding applicable periods that is
permitted under section 1.448-2, other than a change to
exclude tax years from an applicable period under section
1.448-2(d)(6); from a sub-method of its current NAE method
provided in section 1.448-2 regarding tracing of recoveries to
another sub-method regarding tracing of recoveries permitted
under section 1.448-2(f)(2)(iii); or, to the NAE book safe harbor
method described in section 5.01 of Rev. Proc. 2011-46,
2011-42 I.R.B. 518. Note: an applicant using the NAE book safe
harbor method that wants to make certain changes within the
NAE book safe harbor method (as described in sections 5.02
and 5.03 of Rev. Proc. 2011-46) must attach a statement to its
Federal income tax return in lieu of filing a Form 3115. See
Rev. Proc. 2011-46, section 14.04 in the Appendix of Rev.
Proc. 2011-14, and Rev. Proc. 2006-56, 2006-2 C.B. 1169.
36. Interest accrual on non-performing loans (section
451) — for an accrual method bank accounting for qualified
stated interest on non-performing loans, to the method whereby
interest is accrued until either the loan is worthless under
section 166 and is charged off as a bad debt or the interest is
determined to be uncollectible. See section 15.01 in the
Appendix of Rev. Proc. 2011-14.
37. Advance rentals (section 451) — for advance rentals
other than advance rentals subject to section 467, to inclusion
in gross income in the tax year received. See section 15.02 in
the Appendix of Rev. Proc. 2011-14.
38. State or local income or franchise tax refunds
(section 451) — for an accrual method applicant with state or
local income or franchise tax refunds, to accrue these items in
the tax year the applicant receives payments or notice of
approval of its refund claim (whichever is earlier), according to
Rev. Rul. 2003-3, 2003-1 C.B. 252. See section 15.03 in the
Appendix of Rev. Proc. 2011-14.
39. Capital cost reduction (CCR) payments (section
451) — for CCR payments (as defined in Rev. Proc. 2002-36,

2002-1 C.B. 993) made by vehicle lessees, to the method that
excludes these payments from the applicant’s gross income
and from the applicant’s bases in the purchased vehicles. See
section 15.04 in the Appendix of Rev. Proc. 2011-14.
40. Exclusion for certain returned magazines,
paperbacks, or records (section 458) — for an accrual
method applicant electing to exclude from gross income some
or all of the income attributable to qualified sales during the tax
year of magazines, paperbacks, or records that are returned
before the close of the applicable merchandise return period for
that tax year. The applicant’s Form 3115 need contain only the
information listed in Regulations section 1.458-2(d). This
election does not fall under the procedures of Rev. Proc.
2011-14. Instead, see Regulations section 1.458-2.
41. Percentage-of-completion (section 460) — for an
applicant not required by section 460 to use the
percentage-of-completion method to account for its long-term
contracts, from an exempt-contract method properly applied to
the percentage-of-completion method. Complete Schedule D,
Parts I and III, of Form 3115. See section 18.01 in the Appendix
of Rev. Proc. 2011-14.
42. Timing of incurring employee medical benefits
liabilities (section 461) — for an applicant with an obligation to
pay an employee’s medical expenses (including medical
expenses for retirees and employees who filed claims under a
workers’ compensation act) that is neither insured nor paid from
a welfare benefit fund, to treatment as a liability incurred in the
tax year in which the applicant’s employee files the claim with
the applicant; or, if the applicant has a liability to pay a third
party for medical services to its employees, to treatment as a
liability as incurred in the tax year in which the services are
provided. See section 19.01(1) in the Appendix of Rev. Proc.
2011-14.
43. Timing of incurring real property taxes, personal
property taxes, state income taxes, and state franchise
taxes (section 461) — for a qualifying applicant, to treating
these taxes as incurred in the tax year in which the taxes are
paid, or to account for these taxes under the recurring item
exception to the economic performance rules, or to revoke the
ratable accrual election under section 461(c). See section 19.02
in the Appendix of Rev. Proc. 2011-14.
44. Timing of incurring workers’ compensation act, tort,
breach of contract, or violation of law liabilities (section
461) — for a qualifying applicant accounting for self-insured
liabilities arising under any workers’ compensation act or out of
any tort, breach of contract, or violation of law, to treating the
liability as incurred in the tax year in which (a) all the events
have occurred establishing the fact of the liability, (b) the
amount of the liability can be determined with reasonable
accuracy, and (c) payment is made to the person to which the
liability is owed. See section 19.03 in the Appendix of Rev.
Proc. 2011-14.
45. Timing of incurring certain payroll tax liabilities
(section 461) — for FICA and FUTA taxes, state unemployment
taxes, and railroad retirement taxes, to the method under which
the applicant may deduct in Year 1 its otherwise deductible
FICA and FUTA taxes, state unemployment taxes, and railroad
retirement taxes imposed with respect to year-end wages
properly accrued in Year 1, but paid in Year 2, if the
requirements of the recurring item exception are met; or, for
state unemployment taxes and railroad retirement taxes, to the
method stated above where the applicant already uses that
method of accounting for FICA and FUTA taxes; or for FICA
and FUTA taxes to the safe harbor method provided in Rev.
Proc. 2008-25, 2008-1 C.B. 686. See section 19.04 in the
Appendix of Rev. Proc. 2011-14.
46. Cooperative advertising (section 461) — to incurring a
liability in the tax year in which these services are performed,
provided the manufacturer is able to reasonably estimate this
liability even though the retailer does not submit the required
claim form until the following year. See section 19.05 in the
Appendix of Rev. Proc. 2011-14.
47. Distributor commissions (section 263) — from
deducting distributor commissions to capitalizing and
amortizing distributor commissions using the distribution fee

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period method, the 5-year method, or the useful life method.
Complete Schedule E of Form 3115. See section 10.04 in the
Appendix of Rev. Proc. 2011-14.
48. Cash discounts (section 471) — for cash discounts
granted for timely payment, when such discounts approximate a
fair interest rate, from a method of consistently including the
price of the goods before discount in the cost of the goods and
including in gross income any discounts taken to a method of
reducing the cost of the goods by the cash discounts and
deducting as an expense any discounts not taken, or vice
versa. Complete Schedule D, Parts II and III, of Form 3115, as
applicable. See section 21.01 in the Appendix of Rev. Proc.
2011-14.
49. Estimating inventory shrinkage (section 471) — from
the present method of estimating inventory shrinkage in
computing ending inventory to the retail safe harbor method in
section 4 of Rev. Proc. 98-29, 1998-1 C.B. 857, or to a method
other than the retail safe harbor method, provided
(a) the applicant’s present method of accounting does not
estimate inventory shrinkage and (b) the applicant’s new
method of accounting (that estimates inventory shrinkage)
clearly reflects income under section 446(b). Complete
Schedule D, Parts II and III, of Form 3115, as applicable. See
section 21.02 in the Appendix of Rev. Proc. 2011-14.
50. Small taxpayer ($1 million) inventory exception
(section 471) — for a qualifying applicant with average annual
gross receipts of $1,000,000 or less (see Rev. Proc. 2001-10,
2001-1 C.B. 272), from the present method of accounting for
inventoriable items (including, if applicable, the method of
capitalizing costs under section 263A) to treating inventoriable
items in the same manner as materials and supplies that are
not incidental under Regulations section 1.162-3. Complete
Schedule A, Part I, and Schedule D, Parts II and III, of Form
3115, as applicable. See section 21.03 in the Appendix of Rev.
Proc. 2011-14.
51. Small taxpayer ($10 million) inventory exception
(section 471) — for a qualifying applicant with average annual
gross receipts of $10,000,000 or less (see Rev. Proc. 2002-28,
2002-1 C.B. 815), from the present method of accounting for
inventoriable items (including, if applicable, the method of
capitalizing costs under section 263A) to treating inventoriable
items in the same manner as materials and supplies that are
not incidental under Regulations section 1.162-3. Complete
Schedule D, Parts II and III, of Form 3115, as applicable. See
section 21.03 in the Appendix of Rev. Proc. 2011-14.
52. Obsolete.
53. Qualifying volume-related trade discounts (section
471) — to treating qualifying volume-related trade discounts as
a reduction in the cost of merchandise purchased at the time
the discount is recognized in accordance with Regulations
section 1.471-3(b). Complete Schedule D, Parts II and III, of
Form 3115, as applicable. See section 21.04 in the Appendix of
Rev. Proc. 2011-14.
54. Impermissible methods of inventory identification
and valuation (section 471) — from an impermissible method
described in Regulations sections 1.471-2(f)(1) through (5),
including a LIFO taxpayer restoring a write down of inventory
below cost or discontinuing maintaining an inventory reserve;
from a gross profit method; or from a method of determining
market that is not in accordance with section 1.471-4; or
changing from a method that is not in accordance with section
1.471-2(c) for determining the value of “subnormal goods;” to a
permitted inventory method (identification or valuation, or both).
Complete Schedule D, Parts II and III, of Form 3115, as
applicable. See section 21.05 in the Appendix of Rev. Proc.
2011-14.
55. Core Alternative Valuation Method for
remanufactured and rebuilt motor vehicle parts (section
471) — for remanufacturers and rebuilders of motor vehicle
parts and resellers of remanufactured and rebuilt motor vehicle
parts that use the lower of cost or market method to value their
inventory of cores, to the safe harbor method of accounting (the
Core Alternative Valuation method) to value inventories of cores
as provided for in Rev. Proc. 2003-20, 2003-1 C.B. 445.
Complete Schedule D, Parts II and III, of Form 3115, as

applicable. See section 21.06 in the Appendix of Rev. Proc.
2011-14.
56. Change from LIFO inventory method (section
472) — for an applicant changing from the LIFO inventory
method for its entire LIFO inventory, or for one or more
dollar-value pools within its LIFO inventory, to the permitted
method as described in section 22.01(1)(b) in the Appendix of
Rev. Proc. 2011-14. Complete Schedule D, Parts II and III, of
Form 3115, as applicable. See section 22.01 in the Appendix of
Rev. Proc. 2011-14.
57. Determining current-year cost under the LIFO
inventory method (section 472) — for an applicant changing
its method of determining current-year cost: to: (a) the actual
cost of the goods most recently purchased or produced
(most-recent acquisitions method); (b) the actual cost of the
goods purchased or produced during the tax year in the order of
acquisition (earliest-acquisitions method); (c) the average unit
cost equal to the aggregate actual cost of all the goods
purchased or produced throughout the tax year divided by the
total number of units so purchased or produced; (d) the specific
identification method; or (e) a rolling-average method if the
applicant uses that rolling-average method in accordance with
Rev. Proc. 2008-43, 2008-30 I.R.B. 186, as modified by Rev.
Proc. 2008-52, 2008-2 C.B. 587. Complete Schedule C, Part I,
of Form 3115. See section 22.02 in the Appendix of Rev. Proc.
2011-14.
58. Alternative LIFO inventory method (section 472) — for
a qualifying applicant that sells new automobiles or new
light-duty trucks, to the Alternative LIFO Method described in
Rev. Proc. 97-36, 1997-2 C.B. 450, as modified by Rev. Proc.
2008-23, 2008-1 C.B. 664. Complete Schedule C of Form 3115,
as applicable. See section 22.03 in the Appendix of Rev. Proc.
2011-14.
59. Used vehicle alternative LIFO method (section
472) — for a qualifying applicant that sells used automobiles and
used light-duty trucks, to the Used Vehicle Alternative LIFO
Method, as described in Rev. Proc. 2001-23, 2001-1 C.B. 784,
as modified by Announcement 2004-16, 2004-1 C.B. 668 and
Rev. Proc. 2008-23, 2008-1 C.B. 664. Complete Schedule C,
Part I, of Form 3115. See section 22.04 in the Appendix of Rev.
Proc. 2011-14.
60. Determining the cost of used vehicles purchased or
taken as a trade-in (section 472) — for a qualifying applicant,
to a method of (a) determining the cost of used vehicles
acquired by trade-in using the average wholesale price listed by
a consistently used official used car guide on the date of the
trade-in; (b) using a different official used vehicle guide for
determining the cost of used vehicles acquired by trade-in; (c)
determining the cost of used vehicles purchased for cash using
the actual purchase price of the vehicle; or (d) reconstructing
the beginning-of-the-year cost of used vehicles purchased for
cash using values computed by national auto auction
companies based on vehicles purchased for cash, where the
national auto auction company selected is consistently used.
Complete Schedule C, Part I, of Form 3115. See section 22.05
in the Appendix of Rev. Proc. 2011-14.
61. Change to IPIC inventory method (section 472) — for a
qualifying applicant, from a non-inventory price index
computation (IPIC) LIFO inventory method to the IPIC method
in accordance with all relevant provisions of Regulations section
1.472-8(e)(3); or, from the IPIC method as described in T.D.
7814, 1982-1 C.B. 84 (the old IPIC method) to the IPIC method
as described in T.D. 8976, 2002-1 C.B. 421 (the new IPIC
method), which includes the following required changes (if
applicable): from using 80% of the inventory price index (IPI) to
using 100% of the IPI to determine the base-year cost and
dollar-value of a LIFO pool(s); from using a weighted arithmetic
mean to using a weighted harmonic mean to compute an IPI for
a dollar-value pool(s); and from using a components-of-cost
method to define inventory items to using a total-product-cost
method to define inventory items. Complete Schedule C of
Form 3115, as applicable. See section 22.06 in the Appendix of
Rev. Proc. 2011-14.
62. Changes within IPIC inventory method (section
472) — for one or more of the following changes within IPIC:

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(a) from the double-extension IPIC method to the link-chain
IPIC method, or vice versa; (b) to or from the 10 percent
method; (c) to a pooling method described in Regulations
section 1.472-8(b)(4) or Regulations section 1.472-8(c)(2),
including a change to begin or discontinue applying one or both
of the 5 percent pooling rules; (d) combine or separate pools as
a result of the application of a 5 percent pooling rule described
in Regulations section 1.472-8(b)(4) or Regulations section
1.472-8(c)(2); (e) change the selection of BLS tables from
Table 3 (Consumer Price Index for All Urban Consumers
(CPI-U): U.S. city average, detailed expenditure categories) of
the monthly CPI Detailed Report to Table 6 (Producer price
indexes and percent changes for commodity groupings and
individual items, not seasonally adjusted) of the monthly PPI
Detailed Report, or vice versa; (f) change the assignment of
one or more inventory items to BLS categories under either
Table 3 of the monthly CPI Detailed Report or Table 6 of the
monthly PPI Detailed Report; (g) change the representative
month when necessitated because of a change in tax year or a
change in method of determining current-year cost made
pursuant to section 22.02 in the Appendix of Rev. Proc.
2011-14; or (h) change from using preliminary BLS price
indexes to using final BLS price indexes to compute an
inventory price index, or vice versa. Complete Schedule C of
Form 3115, as applicable. See section 22.07 in the Appendix of
Rev. Proc. 2011-14.
63. Replacement cost method for automobile dealers’
parts inventory (sections 471 and 472) — to the replacement
cost method for automobile dealers’ parts inventory described
in Rev. Proc. 2002-17, 2002-1 C.B. 676. Complete Schedule D,
Parts II and III, of Form 3115, as applicable. See section 21.07
in the Appendix of Rev. Proc. 2011-14.
64. Mark-to-market (section 475) — for accounting for
securities or commodities by commodities dealers, securities
traders, and commodities traders, to the mark-to-market
method under section 475(e) or (f). An election statement must
be filed earlier than the due date of Form 3115. See Rev. Proc.
99-17, 1999-1 C.B. 503, for rules relating to this statement. See
section 23.01 in the Appendix of Rev. Proc. 2011-14.
65. Dealer status changes (section 475) — for an applicant
electing out of certain exemptions from securities dealer status,
to the mark-to-market method. This change does not fall under
the procedures of Rev. Proc. 2011-14. Instead, see Rev. Proc.
97-43, 1997-2 C.B. 494.
66. Bank reserves for bad debts (section 585) — for a bank
(as defined in section 581, including a bank for which a qualified
subchapter S subsidiary (QSub) election is filed) to change
from the section 585 reserve method to the section 166
specific charge-off method. See section 24.01 in the Appendix
to Rev. Proc. 2011-14.
67. Insurance company premium acquisition expenses
(section 832) — for certain insurance companies, to a safe
harbor method of accounting for premium acquisition expenses
set forth in Rev. Proc. 2002-46, 2002-2 C.B. 105. See section
25.01 in the Appendix of Rev. Proc. 2011-14.
68. Discounted unpaid losses (section 846) — for
insurance companies other than life insurance companies
computing discounted unpaid losses, to the composite method
or to alternative methods set forth in Notice 88-100, 1988-2
C.B. 439, and Rev. Proc. 2002-74, 2002-2 C.B. 980. See
section 26.01 in the Appendix of Rev. Proc. 2011-14.
69. Obsolete.
70. Functional currency (section 985) — to the use of
another functional currency for the applicant or its qualified
business unit (QBU), other than a QBU described in Regulation
section 1.985-1(b)(1)(iii). See section 29.01 in the Appendix of
Rev. Proc. 2011-14.
71. Rule of 78s (section 1272) — for stated interest on
certain short-term consumer loans, from the Rule of 78s
method to the constant yield method. See section 14.05 in the
Appendix of Rev. Proc. 2011-14.
72. Original issue discount (sections 1272 and 1273) — to
the principal-reduction method for de minimis original issue
discount (OID). See section 31.01 in the Appendix of Rev. Proc.
2011-14.

73. Market discount bonds (section 1278) — from
including market discount currently in income for the tax year to
which the discount is attributable to including market discount in
income for the tax year of disposition or partial principal
payment (revoking the section 1278(b) election). See section
32.01 in the Appendix of Rev. Proc. 2011-14.
74. Interest income on short-term obligations (section
1281) — to currently including accrued interest and discount in
income (to comply with section 1281). See section 33.01 in the
Appendix of Rev. Proc. 2011-14.
75. Stated interest on short-term loans (section
1281) — for a bank using the cash receipts and disbursements
method of accounting, from accruing stated interest on
short-term loans made in the ordinary course of business to
using the cash method to report such interest. See section
33.02 in the Appendix of Rev. Proc. 2011-14.
76. Sales of mortgage loans (section 1286) — for
accounting for certain sales of mortgage loans in which the
seller also enters into a contract to service the mortgages in
consideration for amounts received from interest payments,
from a method that is inconsistent with Rev. Rul. 91-46, 1991-2
C.B. 358, to a method that is consistent with Rev. Rul. 91-46.
However, the change is only an automatic accounting method
change for certain taxpayers who are under examination. This
change does not fall under the procedures of Rev. Proc.
2011-14. Instead, see Rev. Proc. 91-51, 1991-2 C.B. 779.
77. Environmental remediation costs (section 263A) — for
costs incurred to clean up land that a taxpayer contaminated
with hazardous waste from the taxpayer’s manufacturing
operations, to capitalizing such costs in inventory costs under
section 263A. See section 11.05 in the Appendix of Rev. Proc.
2011-14.
78. Costs of intangibles and certain transactions (section
263(a)) — for amounts paid or incurred to acquire or create
intangibles, or to facilitate an acquisition of a trade or business,
a change in the capital structure of a business entity, and
certain other transactions, to a method of accounting provided
in Regulations sections 1.263(a)-4, 1.263(a)-5, and
1.167(a)-3(b). Complete Schedule E of Form 3115 for changes
to a method of accounting provided in Regulations section
1.167(a)-3(b). See Rev. Proc. 2006-12, 2006-1 C.B. 310, as
modified by Rev. Proc. 2006-37, 2006-2 C.B. 499, and section
10.05 in the Appendix of Rev. Proc. 2011-14.
79. REMIC inducement fees (sections 860A-860G) — for
an inducement fee received in connection with becoming the
holder of a noneconomic residual interest in a REMIC, to a safe
harbor method provided under Regulations section
1.446-6(e)(1) or (e)(2). See Rev. Proc. 2004-30, 2004-1 C.B.
950, and section 27.01 in the Appendix of Rev. Proc. 2011-14.
80. All events test method for credit card annual fees
(section 451) — to a method that satisfies the all events test in
accordance with Rev. Rul. 2004-52, 2004-1 C.B. 973. See
section 15.05 in the Appendix of Rev. Proc. 2011-14.
81. Ratable inclusion method for credit card annual fees
(section 446) — to the ratable inclusion method for credit card
annual fees. See section 15.05 in the Appendix of Rev. Proc.
2011-14.
82. Credit card late fees (section 451) — to a method that
treats credit card late fees as interest income that creates or
increases OID on the pool of credit card loans to which the fees
relate. See section 15.06 in the Appendix of Rev. Proc.
2011-14.
83. Full inclusion method for certain advance payments
(section 451) — to the full inclusion method as described in
section 5.01 of Rev. Proc. 2004-34, 2004-1 C.B. 991. The
applicant must be using, or changing to, an overall accrual
method of accounting. See section 15.07 in the Appendix of
Rev. Proc. 2011-14.
84. Deferral method for certain advance payments
(section 451) — to the deferral method as described in section
5.02 of Rev. Proc. 2004-34, 2004-1 C.B. 991 (except as
provided in section 8.03 and 8.04(2) of Rev. Proc. 2004-34).
The applicant must be using, or changing to, an overall accrual
method of accounting. See section 15.07 in the Appendix of

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Rev. Proc. 2011-14, Rev. Proc. 2004-34, as modified and
clarified by Rev. Proc. 2011-18, 2011-5 I.R.B. 443.
85. Film producer’s treatment of certain creative property
costs (section 446) — to account for creative property costs
under the safe harbor method provided in Rev. Proc. 2004-36,
2004-1 C.B. 1063. See section 14.06 in the Appendix of Rev.
Proc. 2011-14.
86. Timber fertilization costs (section 162) — for costs
incurred by a timber grower for the post-establishment
fertilization of an established timber stand, to treat such costs
as ordinary and necessary business expenses deductible under
section 162. See section 3.04 in the Appendix of Rev. Proc.
2011-14.
87. Change in general asset account treatment due to a
change in the use of MACRS property (section 168) — to the
method of accounting provided in Regulations sections
1.168(i)-1(c)(2)(ii)(E) and 1.168(i)-1(h)(2) (as in effect before
January 1, 2012). Complete Schedule E of Form 3115. See
Regulations section 1.168(i)-1(l)(2)(ii) (as in effect before
January 1, 2012) and section 6.09 in the Appendix of Rev.
Proc. 2011-14.
88. Change in method of accounting for depreciation due
to a change in the use of MACRS property (section
168) — to the method of accounting provided in Regulations
section 1.168(i)-4 or to revoke the election provided in
Regulations section 1.168(i)-4(d)(3)(ii) to disregard a change in
use of MACRS property. Complete Schedule E of Form 3115.
See Regulations section 1.168(i)-4(g)(2) and section 6.10 in the
Appendix of Rev. Proc. 2011-14.
89. Depreciation of qualified non-personal use vans and
light trucks (section 280F) — for certain vehicles placed in
service before July 7, 2003, to a method of accounting in
accordance with Regulations section 1.280F-6(f)(2)(iv).
Complete Schedule E of Form 3115. See Regulations section
1.280F-6(f)(2)(iv) and section 6.11 in the Appendix of Rev.
Proc. 2011-14.
90. Insurance companies’ incentive payments to health
care providers (section 446) — for deducting provider
incentive payments, to the method of including those payments
in discounted unpaid losses without regard to section 404. See
section 14.07 in the Appendix of Rev. Proc. 2011-14.
91. Up-front network upgrade payments received by
utilities (section 61) — to a safe harbor method provided in
Rev. Proc. 2005-35, 2005-2 C.B. 76. See section 1.01 in the
Appendix of Rev. Proc. 2011-14.
92. Allocation of environmental remediation costs to
production (section 263A) — to a method that allocates under
section 263A environmental remediation costs to the inventory
produced during the tax year such costs are incurred. See Rev.
Rul. 2005-42, 2005-2 C.B. 67, and section 11.06 in the
Appendix of Rev. Proc. 2011-14.
93. Obsolete.
94. Credit card cash advance fees (section 451) — to a
method that treats credit card cash advance fees as creating or
increasing original issue discount (OID) on a pool of credit card
loans that includes the cash advances that give rise to the fees.
See section 15.08 in the Appendix of Rev. Proc. 2011-14.
95. Obsolete.
96. Replacement cost method for heavy equipment
dealers’ parts inventory (sections 471 and 472) — to the
replacement cost method for heavy equipment dealers’ parts
inventory described in Rev. Proc. 2006-14, 2006-1 C.B. 350.
Complete Schedule D, Parts II and III, of Form 3115, as
applicable. See section 21.08 in the Appendix of Rev. Proc.
2011-14.
97. Depreciation of qualified revitalization building in the
expanded area of a renewal community (section 1400I) — for
a qualified revitalization building that is placed in service by the
applicant after December 31, 2001, in the area of a renewal
community that was expanded by the U.S. Department of
Housing and Urban Development and for which the applicant
receives a retroactive commercial revitalization expenditure
allocation. This change applies only if the applicant filed the
federal tax return for the placed-in-service year of that building
on or before the date the applicant received the retroactive

commercial revitalization expenditure allocation. Complete
Schedule E of Form 3115. See section 6.12 in the Appendix of
Rev. Proc. 2011-14.
98. Insurance contracts acquired in an assumption
reinsurance transaction (section 197) — for an applicant’s
first tax year ending after April 10, 2006, for certain insurance
contracts acquired in an assumption reinsurance transaction, to
comply with Regulations section 1.197-2(g)(5). See Regulations
section 1.197-2(g)(5) and section 6.13 in the Appendix or Rev.
Proc. 2011-14.
99. Obsolete.
100. Obsolete.
101. Obsolete.
102. Obsolete.
103. Obsolete.
104. Obsolete.
105. Obsolete.
106. Timing of incurring certain liabilities for services or
insurance (section 461) — for an applicant that is currently
treating the mere execution of a contract for services or
insurance as establishing the fact of the liability under section
461 and wants to change from that method for liabilities for
services or insurance to comply with Rev. Rul. 2007-3, 2007-1
C.B. 350. See section 19.06 in the Appendix of Rev. Proc.
2011-14.
107. Impermissible to permissible method of accounting
for depreciation or amortization for disposed depreciable
or amortizable property (sections 167, 168, 197, 1400I,
1400L(b), 1400L(c), or 1400N(d) or former 168) — for an item
of certain depreciable or amortizable property that has been
disposed of by the applicant and for which the applicant did not
take into account any depreciation allowance or did take into
account some depreciation but less than the depreciation
allowable, from using an impermissible method of accounting
for depreciation to using a permissible method of accounting for
depreciation. Complete Schedule E of Form 3115. See section
6.17 in the Appendix of Rev. Proc. 2011-14.
108. Change by bank for uncollected interest (section
446) — for a bank (as defined in Regulation section
1.166-2(d)(4)(i)) that uses an accrual method of accounting; is
subject to supervision by Federal authorities, or by state
authorities maintaining substantially equivalent standards; and
has six or more years of collection experience to change to the
safe harbor method of accounting for uncollected interest (other
than interest described in Regulation section 1.446 – 2(a)(2)) set
forth in section 4 of Rev. Proc. 2007-33, 2007-1 C.B. 1289. See
section 14.08 in the Appendix of Rev. Proc. 2011-14.
109. Rotable spare parts (section 263(a)) — for an applicant
that maintains a pool or pools of rotable spare parts that are
primarily used to repair customer-owned (or customer-leased)
equipment under warranty or maintenance agreements to the
safe harbor method provided in Rev. Proc. 2007-48, 2007-2
C.B. 110. Complete Schedule E of Form 3115. See section
10.06 in the Appendix of Rev. Proc. 2011-14.
110. Rotable spare parts (section 471) — from the safe
harbor method (or a similar method) of treating rotable spare
parts as depreciable assets, in accordance with Rev. Proc.
2007-48, 2007-2 C.B. 110, to treating rotable spare parts as
inventoriable items. See section 21.09 in the Appendix to Rev.
Proc. 2011-14.
111. Advance trade discount method (section 471) — for an
accrual method applicant required to use an inventory method
of accounting and maintaining inventories, as provided in
section 471, that receives advance trade discounts to the
Advance Trade Discount Method described in Rev. Proc.
2007-53, 2007-2 C.B. 233. See section 21.10 in the Appendix
to Rev. Proc. 2011-14.
112. Changes to the Vehicle-Pool Method (section
472) — for a retail dealer or wholesaler distributor (reseller) of
cars and light-duty trucks to the Vehicle-Pool Method as
described in Rev. Proc. 2008-23, 2008-1 C.B. 664. See section
22.08 in the Appendix to Rev. Proc. 2011-14.
113. Payroll tax liabilities (section 461) — for an accrual
method applicant that wants to change its method for FICA and
FUTA taxes to the safe harbor method provided in Rev. Proc.

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121. Repairable and reusable spare parts (section
263(a)) — to treat certain repairable and reusable spare parts
as depreciable property in accordance with the holding in Rev.
Rul. 69-200, 1969-1 C.B. 60, or Rev. Rul. 69-201, 1969-1 C.B.
60. Complete Schedule E of Form 3115. See section 10.07 in
the Appendix of Rev. Proc. 2011-14, as modified by section
4.02(15) of Rev. Proc. 2012-19. This change is only available
for spare parts that have been placed in service by the taxpayer
in taxable years beginning before January 1, 2012.
122. Overall accrual method other than for the first
section 448 year (section 446) — for a qualifying applicant for
other than its first section 448 year, from the overall cash
receipts and disbursements method to an overall accrual
method, or to an overall accrual method in conjunction with the
recurring item exception under 461(h)(3). Complete Schedule
A, Part I, of Form 3115. Also complete Schedule D, Parts II and
III, as applicable. See section 14.01 in the Appendix of Rev.
Proc. 2011-14.
123. Change in overall method from the cash method to
an accrual method for the first section 448 year (section
446) — for an applicant that is required by section 448 to
change from the overall cash method to an overall accrual
method and the applicant qualifies to make the change under
the automatic consent procedures of Regulation sections
1.448-1(g) and (h)(2) as well as Rev. Proc. 2011-14 for a year
of change that is the applicant’s first section 448 year. See
Regulation sections 1.448-1(g) and (h)(2), and section 14.01 in
the Appendix to Rev. Proc. 2011-14.
124. Change from the cash method to an accrual method
for specific items (section 446) — for a qualifying applicant
using an overall accrual method and accounting for one or more
identified specific items of income and expense on the cash
method to an accrual method of accounting for the identified
specific item or items. See section 14.09 in the Appendix to
Rev. Proc. 2011-14.
125. Multi-year service warranty contracts (section
446) — for an eligible accrual method manufacturer, wholesaler,
or retailer of motor vehicles or other durable consumer goods
that wants to change to the service warranty income method
described in section 5 of Rev. Proc. 97-38, 1997-2 C.B. 479.
See Rev. Proc. 97-38 and section 14.10 in the Appendix to
Rev. Proc. 2011-14.
126. Overall cash method for specified transportation
industry taxpayers (section 446) — for “specified
transportation industry taxpayers,” as defined in section
14.11(2) of Rev. Proc. 2011-14, with average annual gross
receipts of more than $10,000,000 and not in excess of
$50,000,000 to the overall cash receipts and disbursements
method. See section 14.11 in the Appendix to Rev. Proc.
2011-14.
127. Change to overall cash/hybrid method for certain
banks (section 446) — for an eligible bank, as defined in
section 14.12(2)(a) in the Appendix to Rev. Proc. 2011-14, to
an overall cash/hybrid method described in section 14.12(2)(b)
in the Appendix to Rev. Proc. 2011-14. See section 14.12 in the
Appendix to Rev. Proc. 2011-14.
128. Change to overall cash method for farmers (section
446) — for a qualifying applicant engaged in the trade or
business of farming to the overall cash receipts and
disbursements method. See section 14.13 in the Appendix to
Rev. Proc. 2011-14.
129. Nonshareholder contributions to capital under
section 118 (section 446) — from excluding from gross income
under section 61 certain payments or the fair market value of
property received (including customer connection fees received
by a regulated public utility described in section 118(c)), by
characterizing the payments or the fair market value of property
as nontaxable contributions to capital under section 118(a), to
including the payments or the fair market value of property in
gross income under section 61. This change also applies to a
regulated public utility described in section 118(c) that changes
from including in gross income under section 61 payments or
fair market value of property received that are contributions in
aid of construction under section 118(c) and Regulation section
1.118-2 and that meet the requirements of sections 118(c)(1)(B)

2008-25, 2008-1 C.B. 686, which provides that, solely for the
purposes of the recurring item exception, an applicant will be
treated as satisfying the requirement in Regulation section
1.461-5(b)(1)(i) for its payroll tax liability in the same tax year in
which all events have occurred that establish the fact of the
related compensation liability and the amount of the related
compensation liability can be determined with reasonable
accuracy. See section 19.04 in the Appendix to Rev. Proc.
2011-14.
114. Rolling-average method of accounting for inventories
(sections 471 and 472) — for an applicant required to account
for inventories under section 471 and that uses a
rolling-average method to value inventories for financial
accounting purposes to the same rolling-average method to
value inventories for federal income tax purposes, in
accordance with Rev. Proc. 2008-43, 2008-30 I.R.B.186. See
section 21.14 in the Appendix to Rev. Proc. 2011-14.
115. Kansas additional first year depreciation — for
qualified Recovery Assistance property placed in service by the
applicant on or after May 5, 2007, during the tax year that
includes May 5, 2007, to claim the Kansas additional first year
depreciation deduction for a class of property for which the
taxpayer did not claim the Kansas additional first year
depreciation deduction on the taxpayer’s timely filed federal tax
return for the tax year that includes May 5, 2007, provided the
taxpayer did not make an election not to deduct the Kansas
additional first year depreciation for the class of property.
Complete Schedule E of Form 3115. See section 6.22 in the
Appendix to Rev. Proc. 2011-14.
116. Depreciation of MACRS property acquired in a
like-kind exchange or as a result of an involuntary
conversion (section 168) — to apply the provisions of
Regulations section 1.168(i)-6 or rely on prior guidance by the
Service for determining the depreciation deductions of
replacement MACRS property and relinquished MACRS
property, for a like-kind exchange or an involuntary conversion
of MACRS property for which the time of disposition, the time of
replacement, or both occur on or before February 27, 2004 or,
to apply Regulations section 1.168(i)-6(i)(2) to the relinquished
property and the replacement property for which the time of
disposition, the time of replacement, or both occur on or before
February 26, 2007, if the replacement property replaces
relinquished property for which the taxpayer made a valid
election under section 168(f)(1) to exclude it from the
application of section 168. Complete Schedule E of Form 3115.
See Regulations sections 1.168(i)-6 and 1.168(i)-6(i)(2), and
section 6.18 in the Appendix of Rev. Proc. 2011-14.
117. Lessor improvements abandoned at termination of
lease (section 168) — for an applicant that is a lessor, from
depreciating under section 168 an improvement described in
section 168(i)(8)(B)(i) and (ii) after the improvement was
irrevocably disposed of or abandoned by the lessor at the
termination of the applicable lease by the lessee to complying
with section 168(i)(8)(B) by recognizing gain or loss upon
disposition or abandonment of the improvement. See section
168(i)(8)(B), and section 6.19 in the Appendix of Rev. Proc.
2011-14.
118. Repairable and reusable spare parts (section
168) — for repairable and reusable spare parts, from item
accounting to multiple asset accounting (pooling) in accordance
with section 6.20(2) in the Appendix of Rev. Proc. 2011-14, or
to using a permissible method of identifying disposed repairable
and reusable spare parts, as described in section 6.20(3) in the
Appendix of Rev. Proc. 2011-14. Complete Schedule E of Form
3115. See section 6.20 in the Appendix of Rev. Proc. 2011-14,
as modified by section 4.02(14) of Rev. Proc. 2012-19. This
change is only available for spare parts that have been placed
in service by the taxpayer after 1986 and before taxable years
beginning after December 31, 2011.
119. Land (sections 167 and 168) — from depreciating land
to not depreciating land, or from depreciating a nondepreciable
land improvement to not depreciating a nondepreciable land
improvement. See section 6.21 in the Appendix of Rev. Proc.
2011-14.
120. Obsolete.

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and 118(c)(1)(C) to excluding from income the payments or the
fair market value of the property as nontaxable contributions to
capital under sections 118(a). See section 14.14 in the
Appendix to Rev. Proc. 2011-14.
130. Retainages (section 451) — for an accrual method
applicant’s retainages under section 451 to a method
consistent with the holding in Rev. Rul. 69-314, 1969-1 C.B.
139. This change does not apply to retainages under long-term
contracts as defined in section 460(f). An applicant changing its
method of accounting under this section must treat all
retainages (receivables and payables) in the same manner.
See section 15.10 in the Appendix to Rev. Proc. 2011-14.
131. Series E, EE, or I U.S. savings bonds (section
454) — for a cash method taxpayer changing the taxpayer’s
method of accounting for interest income on Series E, EE, or I
U.S. savings bonds from reporting as interest income the
increase in redemption price on a bond occurring in a tax year
to reporting this income in the tax year in which the bond is
redeemed, disposed of, or finally matures, whichever is earliest.
A statement in lieu of a Form 3115 is authorized for this
change. See section 16.01 in the Appendix to Rev. Proc.
2011-14.
132. Prepaid subscription income (section 455) — for an
accrual method applicant changing its method of accounting for
prepaid subscription income to the method described in section
455 and the related regulations, including an eligible applicant
that wants to make the “within 12 months” election under
Regulations section 1.455-2. A statement in lieu of a Form 3115
is authorized for this change. See section 17.01 in the Appendix
to Rev. Proc. 2011-14.
133. Timing of incurring liabilities for bonuses (section
461) — to treat bonuses as incurred in the tax year in which all
events have occurred that establish the fact of the liability to
pay a bonus and the amount of the liability can be determined
with reasonable accuracy. See section 19.01(2) in the Appendix
to Rev. Proc. 2011-14.
134. Timing of incurring liabilities for vacation pay
(section 461) — to treat vacation pay as incurred in the tax year
in which all events have occurred that establish the fact of the
liability to pay vacation pay, and the amount of the liability can
be determined with reasonable accuracy. The applicant may
make this change if the vacation pay vests in that tax year and
the vacation pay is received by the employee by the 15th day of
the 3rd calendar month after the end of that tax year. See
section 19.01(3) in the Appendix to Rev. Proc. 2011-14.
135. Rebates and allowances (section 461) — for an accrual
method applicant’s liability for rebates and allowances to the
recurring item exception method under section 461(h)(3) and
Regulation section 1.461-5. See section 19.07 in the Appendix
to Rev. Proc. 2011-14.
136. Change from an improper method of inclusion of
rental income or expense to inclusion in accordance with
the rent allocation (section 467) — for an applicant that is a
party to a section 467 rental agreement; and is changing its
method for its fixed rent to the rent allocation method provided
in Regulation section 1.467-1(d)(2)(iii). See section 20.01 in the
Appendix to Rev. Proc. 2011-14.
137. Permissible methods of inventory identification and
valuation (section 471) — for an applicant changing from one
permissible method of identifying and valuing inventories to
another permissible method of identifying and valuing
inventories that is not a change described in another section in
the Appendix to Rev. Proc. 2011-14 or in other guidance
published in the IRB. See section 21.11 in the Appendix to Rev.
Proc. 2011-14.
138. Change in the official used vehicle guide utilized in
valuing used vehicles (section 471) — for a used vehicle
dealer from not using an official used vehicle guide for valuing
used vehicles to using an official used vehicle guide for valuing
used vehicles; or from using an official used vehicle guide for
valuing used vehicles to using a different official used vehicle
guide for valuing used vehicles. See section 21.12 in the
Appendix to Rev. Proc. 2011-14.
139. Invoiced advertising association costs for new
vehicle retail dealerships (section 471) — for an applicant

engaged in the trade or business of retail sales of new
automobiles or new light-duty trucks (dealership) from
capitalizing certain advertising costs as acquisition costs under
Regulation section 1.471-3(b) to deducting the advertising
costs under section 162 as the advertising services are
provided to the dealership. See Regulation section
1.461-4(d)(2)(i), and section 21.13 in the Appendix to Rev.
Proc. 2011-14.
140. Changes within the Used Vehicle Alternative LIFO
Method (section 472) — for a taxpayer using the Used Vehicle
Alternative LIFO Method, as described in Rev. Proc. 2001-23,
2001-1 C.B. 784, as modified by Announcement 2004-16,
2004-1 C.B. 668, and Rev. Proc. 2008-23, 2008-1 C.B. 664, to
use a different “official used vehicle guide” in conjunction with
the Used Vehicle Alternative LIFO Method, or to a different
precise manner of using an official used vehicle guide (for
example, a change in the specific guide category that an
applicant uses to represent vehicles of average condition for
purposes of section 4.02(5)(a) of Rev. Proc. 2001-23). See
section 22.09 in the Appendix to Rev. Proc. 2011-14.
141. Changes to dollar-value pools of manufacturers
(section 472) — for a manufacturer that purchases goods for
resale (resale goods) and thus must reassign resale goods from
the pool(s) it maintains for the goods it manufactures to one or
more resale pools, and the manufacturer wants to change from
using multiple pools described in Regulation section
1.472-8(b)(3) to using natural business unit (NBU) pools
described in Regulation section1.472-8(b)(1), or vice versa; or
wants to reassign items in NBU pools described in Regulation
section 1.472-8(b)(1) into the same number or a greater
number of NBU pools. See section 22.10 in the Appendix to
Rev. Proc. 2011-14.
142. Obsolete.
143. Materials and supplies (section 162) — for an applicant
changing to the method of accounting described in Regulations
section 1.162-3 (reserved) to treat materials and supplies as a
deferred expense to be taken into account in the taxable year in
which they are actually consumed and used in operation. See
section 3.05 in the Appendix to Rev. Proc. 2011-14, as
reserved by section 4.01(1) of Rev. Proc. 2012-19. This change
is only available for amounts paid or incurred in taxable years
beginning before January 1, 2012.
144. Repair and maintenance costs (section 162) — for an
applicant changing from capitalizing under section 263(a) costs
paid or incurred to repair and maintain tangible property
(including network assets) to treating the repair and
maintenance costs as ordinary and necessary business
expenses under section 162 and Regulations section 1.162-4.
See section 3.06 in the Appendix to Rev. Proc. 2011-14, as
reserved by section 4.01(1) of Rev. Proc. 2012-19. This change
applies only to taxable years beginning before January 1, 2012.
145. Tenant construction allowances (section 168) — for an
applicant changing from improperly treating the applicant as
having a depreciable interest in the property subject to the
tenant construction allowances for federal income tax purposes
to properly treating the applicant as not having a depreciable
interest in such property for federal income tax purposes; or
from improperly treating the applicant as not having a
depreciable interest in the property subject to the tenant
construction allowances for federal income tax purposes to
properly treating the applicant as having a depreciable interest
in such property for federal income tax purposes. See section
6.23 in the Appendix to Rev. Proc. 2011-14.
146. Dispositions of structural components of a building
(section 168) — for an applicant changing to a unit of property
that is permissible under applicable legal authority for
determining when the applicant has disposed of a building and
its structural components for depreciation purposes. This
change will also affect the determination of gain or loss from the
disposition of the building (including its structural components).
See section 6.24 in the Appendix to Rev. Proc. 2011-14.
Obsolete for tax years beginning on or after January 1, 2012.
For taxable years beginning on or after January 1, 2012, see
change number 177.

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147. Dispositions of tangible depreciable assets (other
than a building or its structural components) (section
168) — for an applicant changing to a unit of property that is
permissible under applicable legal authority for determining
when the applicant has disposed of a section 1245 property a
depreciable land improvement for depreciation purposes. This
change will also affect the determination of gain or loss from the
disposition of the section 1245 property or the depreciable land
improvement. See section 6.25 in the Appendix to Rev. Proc.
2011-14. Obsolete for taxable years beginning on or after
January 1, 2012. For taxable years beginning on or after
January 1, 2012, see change 178.
148. Debt issuance costs (section 446) — for an applicant
changing its method of accounting to comply with Regulation
section 1.446-5, which provides rules for allocating the costs
over the term of the debt. See section 14.15 in the Appendix to
Rev. Proc. 2011-14.
149. Ratable accrual of real property taxes (section
461) — for an accrual method applicant for real property taxes
that relate to a definite period of time to the method described
in section 461(c) and section 1.461-1(c)(1) (ratable accrual
election) for a taxable year other than the applicant’s first
taxable year in which real property taxes are incurred. See
section 19.08 in the Appendix to Rev. Proc. 2011-14.
150. Retail sales facility safe harbor for a motor vehicle
dealership (section 263A) — for a motor vehicle dealership to
treat its sales facility as a retail sales facility as described in
section 5.01 of Rev. Proc. 2010-44, 2010-49 I.R.B. 811. See
section 11.07 in the Appendix of Rev. Proc. 2011-14.
151. Reseller without production activities safe harbor for
a motor vehicle dealership (section 263A) — for a motor
vehicle dealership to be treated as a reseller without production
activities as described in section 5.02 of Rev. Proc. 2010-44,
2010-49 I.R.B. 811. See section 11.07 in the Appendix of Rev.
Proc. 2011-14.
152. Deduction for energy efficient commercial buildings
(section 179D) — for an applicant changing to deduct under
section 179D amounts paid or incurred for the installation of
energy efficient commercial building property, subject to the
limits of section 179D(b), in the year the property is placed in
service. See section 8.04 in the Appendix of Rev. Proc.
2011-14.
153. Advance payments — change in applicable financial
statements (Rev. Proc. 2004-34) — for an applicant using the
deferral method for including advance payments in gross
income in accordance with its applicable financial statement
(AFS) to change its method to recognize advance payments in
gross income under Rev. Proc. 2004-34 consistent with a
changed manner for recognizing advance payments for its AFS.
Although the requirement to file a copy of the application with
the IRS National Office is waived for this application, a taxpayer
may nevertheless file a copy of the application with the IRS
National Office, for example, under the 90-day or 120-day
window in section 6.03(2) or 6.03(3) of Rev. Proc. 2011-14. In
all cases, the requirement in section 6.02(3)(c) of Rev. Proc.
2001-14 to provide an additional copy of the application to the
examining agent(s), appeals officer(s) and counsel to the
government, if applicable, applies to this application. See
section 15.11 in the Appendix of Rev. Proc. 2011-14.
154. California franchise taxes (Rev. Rul. 2003-90) — for an
accrual method applicant changing to recognizing its California
franchise tax liability in the tax year following the tax year in
which the tax is incurred under the Cal. Rev. & Tax Code. See
section 19.09 in the Appendix of Rev. Proc. 2011-14.
155. Unearned premiums (section 833) — for a Blue Cross
or Blue Shield organization within the meaning of section
833(c)(2) or an organization described in section 833(c)(3)
required to change its method of accounting for unearned
premiums because it fails to meet the MLR requirements of
section 833(c)(5). See section 25.02 in the Appendix of Rev.
Proc. 2011-14.
156. Gift cards issued as a refund (Rev. Proc.
2011-17) — for an accrual method applicant who issues gift
cards as a refund for returned goods changing to treat the
transaction as the payment of a cash refund and sale of a gift

card in the amount of the gift card, as provided in Rev. Proc.
2011-17, 2011-5 I.R.B. 441. See section 19.10 in the Appendix
of Rev. Proc. 2011-14.
157. Classification of wireless telecommunications assets
used by wireless telecommunications carriers (sections
167 and 168) — for applicants that have a depreciable interest
in wireless telecommunication assets (as defined in Rev. Proc.
2011-22, 2011-8 I.R.B. 737) used primarily to provide wireless
telecommunications or broadband services by mobile phones
that are changing to the method described in Rev. Proc.
2011-22 to determine the recovery periods for depreciation of
certain tangible assets used by wireless telecommunications
carriers. See Rev. Proc. 2011-22, adding section 6.26 to the
Appendix of Rev. Proc. 2011-14.
158. Wireline network property (section 263(a)) — for
certain applicants that have depreciable interest in wireline
network assets (as described in section 4 of Rev. Proc.
2011-27, 2011-8 I.R.B. 740) used primarily to provide wireline
telecommunication or broadband services that are changing to
(a) the wireline network assets maintenance allowance method
described in section 5 of Rev. Proc. 2011-27, or (b) the
adoption of all, or some, of the units of property described in
section 6 of Rev. Proc. 2011-27, to determine whether
expenditures to maintain, replace, or improve wireline network
assets must be capitalized under section 263(a). See Rev.
Proc. 2011-27, adding section 3.07 to the Appendix of Rev.
Proc. 2011-14.
159. Wireless network property (section 263(a)) — for
certain applicants that have a depreciable interest in wireless
network assets (as described in section 4 of Rev. Proc.
2011-28, 2011-8 I.R.B. 743) used primarily to provide wireless
telecommunications or broadband services by mobile phones
that are changing to (a) the wireless network asset
maintenance allowance method described in section 5 of Rev.
Proc. 2011-28, or (b) the adoption of all, or some, of the units of
property described in section 6 of Rev. Proc. 2011-28, to
determine whether expenditures to maintain, replace or improve
wireless network assets must be capitalized under section
263(a). See Rev. Proc. 2011-28, adding section 3.08 to the
Appendix of Rev. Proc. 2011-14.
160. Electric transmission and distribution property
(section 263(a)) — for certain applicants that have a
depreciable interest in electric transmission or distribution
property (as described in section 4 of Rev. Proc. 2011-43,
2011-37 I.R.B. 326) used primarily to transport, deliver, or sell
electricity that are changing to the method described in Rev.
Proc. 2011-43, to determine whether expenditures incurred to
maintain, replace, or improve transmission and distribution
property are deductible repairs under section 162 or
capitalizable improvements under section 263(a). See Rev.
Proc. 2011-43, adding section 3.09 to the Appendix of Rev.
Proc. 2011-14.
161. Timing of incurring liabilities under the recurring item
exception to the economic performance rules (section
461(h)(3)) — for an applicant changing to a method of
accounting to conform to any of the holdings in Rev. Rul.
2012-1, 2012-2 I.R.B. 255, which addresses the “not material”
and “better matching” requirements of the recurring item
exception and distinguishes contracts for the provision of
services from insurance and warranty contracts.
162. Deducting repair and maintenance costs (section
162) — for an applicant changing from capitalizing under
section 263(a) amounts paid or incurred for tangible property to
deducting these amounts as repair and maintenance costs
under section 162 and Regulations section 1.162-4T and for an
applicant changing its units of property under Regulations
section 1.263(a)-3T(e) solely for purposes of determining
whether amounts paid or incurred improve a unit of property
under Regulations section 1.263(a)-3T. See section 4.02(1) of
Rev. Proc. 2012-19, adding section 3.10 to the Appendix of
Rev. Proc. 2011-14.
163. Change to the regulatory accounting method (section
162) — for a regulated applicant changing its method of
accounting for amounts paid or incurred to repair or maintain
tangible property to follow its method of accounting for

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regulatory accounting purposes to determine whether an
amount paid or incurred improves property under Regulations
section 1.263(a)-3T, consistent with Regulations section
1.263(a)-3T(k). See section 4.02(2) of Rev. Proc. 2012-19,
adding section 3.11 to the Appendix of Rev. Proc. 2011-14.
164. Deducting non-incidental materials and supplies
when used or consumed (section 162) — for an applicant
changing its method of accounting for non-incidental materials
and supplies to the method of deducting such amounts in the
taxable year in which they are actually used or consumed,
consistent with Regulations section 1.162-3T. See section
4.02(3) of Rev. Proc. 2012-19, adding section 3.12 to the
Appendix of Rev. Proc. 2011-14. This change applies only to
the amounts paid or incurred in taxable years beginning on or
after January 1, 2012.
165. Deducting incidental materials and supplies when
paid or incurred (section 162) — for an applicant that wants to
change its method of accounting for incidental materials and
supplies to the method of deducting such amounts in the
taxable year in which they are paid or incurred, consistent with
Regulations section 1.162-3T. See section 4.02(4) of Rev. Proc.
2012-19, adding section 3.13 to the Appendix of Rev. Proc.
2011-14. This change applies only to amounts paid or incurred
in taxable years beginning on or after January 1, 2012.
166. Deducting non-incidental rotable and temporary
spare parts when disposed (section 162) — for an applicant
changing its method of accounting for costs to acquire or
produce non-incidental rotable and temporary spare parts to
the method of deducting such costs in the taxable year in which
the taxpayer disposes of the parts, consistent with Regulations
section 1.162-3T. See section 4.02(5) of Rev. Proc. 2012-19,
adding section 3.14 to the Appendix of Rev. Proc. 2011-14.
This change applies only to amounts paid or incurred in taxable
years beginning on or after January 1, 2012.
167. Change to the optional method for rotable and
temporary spare parts (section 162) — for an applicant
changing its method of accounting for rotable and temporary
spare parts to the optional method of accounting for rotable and
temporary spare parts (described in Regulations section
1.162-3T(e)), consistent with Regulations section 1.162-3T. See
section 4.02(6) of Rev. Proc. 2012-19, adding section 3.15 to
the Appendix of Rev. Proc. 2011-14.
168. Deducting dealer expenses that facilitate the sale of
property (section 162) — for an applicant that is a dealer in
property changing its method of accounting for commissions
and other costs paid or incurred to facilitate the sale of tangible
property to the method of treating such costs as ordinary and
necessary business expenses, consistent with Regulations
section 1.263(a)-1T(d)(1). See section 4.02(7) of Rev. Proc.
2012-19, adding section 3.16 to the Appendix of Rev. Proc.
2011-14.
169. Deducting de minimis amounts (section 263(a)) — for
an applicant changing its method of accounting for amounts
paid or incurred to acquire or produce (including any amounts
paid or incurred to facilitate the acquisition and production of) a
unit of property to the method of applying the de minimis rule
under Regulations sections 1.263(a)-2T(g) and
1.263A-1T(b)(14) to such amounts, consistent with Regulations
section 1.263(a)-2T. See section 4.02(8) of Rev. Proc. 2012-19,
adding section 3.17 to the Appendix of Rev. Proc. 2011-14.
This change applies only to amounts paid or incurred in taxable
years beginning on or after January 1, 2012.
170. Deducting certain costs for investigating or pursuing
the acquisition of property (section 162) — for an applicant
changing its method of accounting from capitalizing to
deducting amounts paid or incurred in the process of
investigating or otherwise pursuing the acquisition of real
property if the amounts meet the requirements of Regulations
section 1.263(a)-2T(f)(2)(iii) or the acquisition of real or
personal property if the amounts are for employee
compensation or overhead costs under Regulations section
1.263(a)-2T(f)(2)(iv), consistent with section 1.263(a)-2T. See
section 4.04(9) of Rev. Proc. 2012-19, adding section 3.18 to
the Appendix of Rev. Proc. 2011-14. This change applies only

to amounts paid or incurred in taxable years beginning on or
after January 1, 2012.
171. Change to the safe harbor routine maintenance on
property other than buildings (section 162) — for an
applicant changing its method of accounting for amounts paid
or incurred for routine maintenance performed on a unit of
property to the method of treating such amounts as amounts
that do not improve the unit or property, consistent with
Regulations section 1.263(a)-3T(g). See section 4.01(10) of
Rev. Proc. 2012-19, adding section 3.19 to the Appendix of
Rev. Proc. 2011-14.
172. Non-dealer expense to facilitate the sale of property
(section 162) — for an applicant that is not a dealer in property
changing its method of accounting for commissions and other
costs paid or incurred to facilitate the sale of property to the
method of capitalizing such costs, consistent with Regulations
section 1.263(a)-1T(d)(1). See section 4.01(11) of Rev. Proc.
2012-19, adding section 10.08 to the Appendix of Rev. Proc.
2011-14.
173. Capitalizing acquisition or production costs (section
263(a)) — for an applicant changing its method of accounting to
capitalizing amounts paid or incurred to acquire or produce
property under Regulations section 1.263(a)-2T and, if
depreciable, to depreciating such property under section 168.
See section 4.01(12) of Rev. Proc. 2012-19, adding section
10.09 to the Appendix of Rev. Proc. 2011-14.
174. Capitalizing improvements to tangible property
(section 263(a)) — for an applicant changing its method of
accounting to capitalizing amounts paid or incurred for
improvements to units of property consistent with Regulations
sections 1.263(a)-1T and 1.263(a)-3T and, if depreciable, to
depreciating such improvements under section 168. See
section 4.01(13) of Rev. Proc. 2012-19, adding section 10.10 to
the Appendix of Rev. Proc. 2011-14.
175. Depreciation of leasehold improvements (sections
167, 168, and 197) — for leasehold improvements in which the
applicant has a depreciable interest at the beginning of the year
of change, from improperly depreciating or amortizing these
leasehold improvements over the term of the lease (including
renewals, if applicable) to properly depreciating or amortizing
these leasehold improvements under section 167(f)(1), 168, or
197, as applicable. This change applies only to taxable years
beginning on or after January 1, 2012. Complete Schedule E of
Form 3115. See section 6.27 in the Appendix to Rev. Proc.
2011-14, as modified by section 5.03(1) of Rev. Proc. 2012-20
(creating new section 6.27).
176. Depreciation of MACRS property (permissible)
(section 168) — for MACRS property, from a permissible
method to another permissible method listed in section 6.28(3)
in the Appendix of Rev. Proc. 2011-14. This change applies
only to taxable years beginning on or after January 1, 2012.
Complete Schedule E of Form 3115. See section 6.28 in the
Appendix to Rev. Proc. 2011-14, as modified by section 5.03(2)
of Rev. Proc. 2012-20 (creating new section 6.28).
177. Dispositions of a building or a structural component
(section 168) — for an applicant changing to an asset that is
permissible under Regulations section 1.168(i)-8T(c)(4) for
determining what building, condominium unit, cooperative unit,
or structural components has been disposed of by the applicant
for depreciation purposes; or from a method not specified in
Regulations section 1.168(i)-8T(f)(1), (f)(2)(i), (f)(2)(ii), or
(f)(2)(iii) to a method specified in Regulations section
1.168(i)-8T(f)(1), (f)(2)(i), (f)(2)(ii), or (f)(2)(iii), as applicable, for
identifying which buildings, condominium units, cooperative
units, or structural components in multiple asset accounts have
been disposed of by the applicant. This change also will affect
the determination of gain or loss from the disposition of the
building, condominium unit, cooperative unit, or the structural
component and may affect whether the applicant must
capitalize amounts paid to restore a unit of property under
Regulations section 1.263(a)-3T(i). This change applies only to
taxable years beginning on or after January 1, 2012. See
section 6.29 in the Appendix to Rev. Proc. 2011-14, as modified
by section 5.03(3) of Rev. Proc. 2012-20 (creating new section
6.29).

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178. Dispositions of tangible assets (other than a building
or its structural components) (section 168) — for an
applicant changing to an asset that is permissible under
Regulations section 1.168(i)-8T(c)(4) for determining what
section 1245 property or depreciable land improvement has
been disposed of by the applicant for depreciation purposes; or
from a method not specified in Regulations section
1.168(i)-8T(f)(1), (f)(2)(i), (f)(2)(ii), or (f)(2)(iii) to a method
specified in Regulations section 1.168(i)-8T(f)(1), (f)(2)(i),
(f)(2)(ii), or (f)(2)(iii), as applicable, for identifying which section
1245 property or depreciable land improvements in multiple
asset accounts have been disposed of by the applicant. This
change also will affect the determination of gain or loss from the
disposition of the section 1245 property or the depreciable land
improvement and may affect whether the taxpayer must
capitalize amounts paid to restore a unit of property under the
Regulations section 1.263(a)-3T(i). This change applies only to
taxable years beginning on or after January 1, 2012. See
section 6.30 in the Appendix to Rev. Proc. 2011-14, as modified
by section 5.03(4) of Rev. Proc. 2012-20 (creating new section
6.30).
179. Dispositions of tangible depreciable assets in a
general account (section 168) — for MACRS property for
which the applicant made a valid general asset election,
changing to an asset that is permissible under Regulations
section 1.168(i)-1T(e)(2)(viii) for determining what asset has
been disposed of by the applicant for depreciation purposes; or
from a method not specified in Regulations section
1.168(i)-1T(j)(2)(i), (ii), (iii), or (iv) to a method specified in
Regulations section 1.168(i)-1T(j)(2)(i), (ii), (iii), or (iv), as
applicable, for identifying which assets have been disposed of

by the applicant. This change also may affect the determination
of gain or loss from the disposition of the asset and may affect
whether the applicant must capitalize amounts paid to restore a
unit of property under Regulations section 1.263(a)-3T(i). This
change applies only to taxable years beginning on or after
January 1, 2012. See section 6.31 in the Appendix to Rev.
Proc. 2011-14, as modified by section 5.03(5) of Rev. Proc.
2012-20 (creating new section 6.31).
180. General asset account elections (section 168) — for an
applicant making a late general asset account election under
section 168(i)(4) and Regulations sections 1.168(i)-1 and
1.168(i)-1T for MACRS property placed in service by the
applicant in a taxable year beginning before January 1, 2012;
or a late election to recognize gain or loss upon the disposition
of all the assets, or the last asset, in a general asset account in
accordance with Regulation section 1.168(i)-1T(3)(ii); or for an
item of MACRS property for which the applicant made a valid
general asset account election, a late election to recognize gain
or loss upon the disposition of that item in a qualifying
disposition in accordance with Regulations section
1.168(i)-1T(e)(3)(iii). This change also may affect the
determination of gain or loss from the disposition of the asset
and may affect whether the applicant must capitalize amounts
paid to restore a unit of property under Regulations section
1.263(a)-3T(i). This change applies only to the applicant’s first
or second taxable year beginning after December 31, 2011.
See section 6.32 in the Appendix to Rev. Proc. 2011-14, as
modified by section 5.03(6) of Rev. Proc. 2012-20 (creating new
section 6.32).

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws
of the United States. Section 446(e) says that you must obtain IRS approval before you change your method of accounting, except
where otherwise provided. To obtain this approval, you are required to provide the information requested on this form. This
information will be used to ensure that you are complying with the applicable laws, and to figure and collect the right amount of tax.
Failure to provide all of the information requested may delay or prevent processing of this form. Providing false information may
subject you to penalties. Routine uses of this information include giving it to the Department of Justice for civil and criminal litigation,
and to cities, states, the District of Columbia, and to U.S. commonwealths and possessions for use in the administration of their tax
laws. We may also disclose this information to other countries under a tax treaty, to Federal and state agencies to enforce Federal
non-tax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the
form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their
contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are
confidential, as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for
individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the estimates shown in the
instructions for their individual income tax return. The estimated burden for all other taxpayers who file this form is shown below.
Form
3115
Sch. A
Sch. B
Sch. C
Sch. D
Sch. E

Recordkeeping
38 hr., 29 min.
3 hr., 21 min.
1 hr., 25 min.
5 hr., 1 min.
27 hr., 30 min.
3 hr., 49 min.

Learning about the law
or the form
19 hr., 54 min.
1 hr., 51 min.
30 min.
45 min.
1 hr., 59 min.
1 hr., 59 min.

Preparing and sending
the form to the IRS
23 hr., 48 min.
3 hr., 11 min.
33 min.
2 hr., 4 min.
2 hr., 31 min.
2 hr., 8 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be
happy to hear from you. You can write to the Internal Revenue Service, Tax Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6406, Washington, DC 20224. Do not send the tax form to this office.
Instead, see When and Where To File earlier.

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