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SECTION 1. PURPOSE ...............423
SECTION 2. BACKGROUND ..............424
.01 Method of accounting ...............424
.02 Changing a method of accounting ................424
.03 Securing consent for a change in method of accounting ............424
.04 Terms and conditions of a change in method of accounting ............425
.05 No retroactive change in method of accounting .................425
.06 Change in method of accounting with a § 481(a) adjustment ............425
(1) Need for adjustment ...............425
(2) Effect on earnings and profits ................425
.07 Change in method of accounting using a cut-off basis .............425
.08 Separate trades or businesses ..............425
.09 Change made as part of an examination ..............425
SECTION 3. DEFINITIONS ..........425
.01 Applicable provisions ...........425
.02 Automatic change ............425
.03 Automatic change procedures ..............425
.04 Cessation of a trade or business .............425
(1) In general........... 425
(2) Examples of transactions that are treated as the cessation of a trade or business ..........426
(3) Exception for conversion to or from S corporation status .............426
(4) Exception for certain transfers to which § 381(a) applies ..........426
(5) Exception for certain transfers within a consolidated group to which § 351 applies ............426
.05 Director ...............426
.06 Federal income tax return ..............426
.07 Form 3115 .............426
(1) In general ............426
(2) Short Form 3115 ..........426
.08 Issue under consideration ............426
(1) Under examination .............426
(2) Before an Appeals office ..........426
(3) Before a federal court ...........427
(4) Certain foreign corporations ............427
.09 List of Automatic Changes .........427
.10 Non-automatic change ...............427
. 11 Non-automatic change procedures ................427
.12 Present method ..............427
.13 Proposed method .................427
.14 SECTION .............427
.15 Section 481(a) adjustment ................427
.16 Section 481(a) adjustment period ........428
.17 Taxpayer ..........428
(1) In general ..............428
(2) Consolidated group............. 428
.18 Under examination ............428
(1) In general ................428
(2) Consolidated group member ...........428
(3) Partnerships subject to TEFRA .......428
(4) Certain foreign corporations ..................429
(5) Taxpayer before Joint Committee on Taxation 429
(6) Taxpayer in Compliance Assurance Process 429
.19 Year of change 429
SECTION 4. SCOPE 429
SECTION 5. ELIGIBILITY 429
.01 In general 429
(1) Automatic change 429
(2) Non-automatic change 430
.02 Liquidations and reorganizations under § 381(a) 430
(1) In general 430
(2) Exception 430
.03 Final year of trade or business 430
(1) In general 430
(2) Exceptions 430