Content area
Full Text
26 CFR 601.204: Changes in accounting periods and methods of accounting.
(Also Part 1, 162. 263A, 446, 447, 448, 460, 471. 481, 1001; 1.162-3, 1.263A-1, 1.446-1, 1.448-IT, 1.460-1, 1.471-1, 1.481-1, 1.481-4, 1.1001-1.)
SECTION 1. PURPOSE
Section 13102 of "An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018," P.L. 115-97 (the "Act"), amended 448 of the Internal Revenue Code (Code) to expand the number of small business taxpayers eligible to use the cash receipts and disbursements method of accounting (cash method). Section 13102 of the Act also amended the Code to exempt small business taxpayers from the requirements to capitalize costs, including for certain home construction contracts, under 263A, to account for certain long-term contracts under 460, and to account for inventories under ?471. This revenue procedure provides the procedures by which a small business taxpayer may obtain automatic consent to change its methods of accounting to rellecl these statutory changes and requests comments containing suggestions for future guidance under 263A, 447, 448, 460, and 471 to implement section 13102 of the Act.
SECTION 2. BACKGROUND
.01 Section 13102 of the Act amended 263A, 447, 448, 460, and 471 for small business taxpayers, increasing the gross receipts test amount for eligibility to use the cash method and providing an exemption from the requirements to apply certain method of accounting rules for inventories, cost capitalization, and long-term contracts. These amendments generally apply to taxable years beginning after December 31, 2017. The amendments to 460 apply to contracts entered into after December 31, 2017, in taxable years ending after December 31, 2017.
.02 Except as otherwise expressly provided by the Code or the regulations, 446(e) and 1.446-1(e)(2) require a taxpayer to secure the consent of the Commissioner before changing a method of accounting for federal income tax purposes. Section 1.446-1(e)(3)(ii) authorizes the Commissioner to prescribe administrative procedures that provide the terms and conditions necessary for a taxpayer to obtain consent to a change in method of accounting. Rev. Proc. 201513, 2015-5 I.R.B. 419, as clarified and modified by Rev. Proc. 2015-33, 2015-24 I.R.B. 1067, as modified by Rev. Proc. 2016-1,2016-1 I.R.B. 1, andas modified by Rev. Proc. 2017-59, 2017-48 I.R.B. 543, provides the general...