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property disposed of by the taxpayer during the year of change

18. Computer software expenditures (sections 162 and

for which the taxpayer deducted less than the depreciation

167) — for costs of developed, acquired, or leased or licensed

allowable, from an impermissible method of accounting for

computer software, to deductible expenses or capital

depreciation or amortization to a permissible method of

expenditures and amortization (for developed software), to

accounting for depreciation or amortization. Complete Schedule

capital expenditures and depreciation or amortization (for

E of Form 3115. Scope limitations do not apply. Attach the

acquired computer software), or to deductible expenses under

original Form 3115 to the filer’s timely filed amended income tax

Regulations section 1.162-11 (for leased or licensed computer

return for the year of change and file the IRS National Office

software). Complete Schedule E of Form 3115 for changes

copy no later than when the original Form 3115 is filed with that

relating to acquired computer software or developed computer

amended return. The amended income tax return must include

software if the change is to capital expenditures and

the adjustments to taxable income and any collateral

amortization. If applicable, attach the statement required by

adjustments to taxable income or tax liability (for example,

section 2B.04 in the Appendix of Rev. Proc. 2002-9, as

adjustments to the amount or character of the gain or loss)

modified by Rev. Proc. 2004-11, 2004-3 I.R.B. 311. See section

resulting from this change in method of accounting. See Rev.

2B in the Appendix of Rev. Proc. 2002-9, as modified by Rev.

Proc. 2004-11, 2004-3 I.R.B. 311.

Proc. 2004-11.

19. Package design costs (section 263) — to the

10. Sale or lease transactions (sections 61, 162, 167, 168,

capitalization method, to the design-by-design capitalization

and 1012) — from treating property as sold to treating property

and 60-month amortization method, or to the pool-of-cost

as leased, and vice versa, and from treating property as

capitalization and 48-month amortization method. For changes

purchased to treating property as leased, and vice versa. Audit

to the capitalization method or to the design-by-design

protection does not apply to this change. This change is made

capitalization and 60-month amortization method, attach the

on a cut-off basis. See section 2.03 in the Appendix of Rev.

statement required by section 3.01(2) in the Appendix of Rev.

Proc. 2002-9.

Proc. 2002-9. See section 3.01 in the Appendix of Rev. Proc.

11. Modern golf course greens (sections 167, 168, and

2002-9.

former section 168) — either to capitalization of land

20. Line pack gas or cushion gas costs (section 263) — to

preparation costs undertaken in the construction of modern

treating the costs as capital expenditures, the costs of

greens that are closely associated with depreciable assets or to

recoverable amounts as not depreciable, and the costs of

the addition to basis of land for earthmoving costs inextricably

unrecoverable amounts as depreciable. A taxpayer that

associated with the land. Complete Schedule E of Form 3115.

changes its method for the costs of unrecoverable amounts

See section 2.04 in the Appendix of Rev. Proc. 2002-9.

also must change to a permissible method of depreciation for

12. Original and replacement tire costs (section 168) — for

those costs. See section 3.02 in the Appendix of Rev. Proc.

qualifying vehicles, to the original tire capitalization method.

2002-9.

Complete Schedule E of Form 3115. See Rev. Proc. 2002-27,

21. Removal costs (section 263) — for certain costs

2002-17 I.R.B. 802.

incurred in the retirement and removal of depreciable assets, to

13. Depreciation of gas pump canopies (sections 167,

a method that conforms with Rev. Rul. 2000-7, 2000-9 I.R.B.

168, and former section 168) — for depreciation of certain

712. For public utility property, attach the statement required by

stand-alone gasoline pump canopies and their supporting

section 3.03(2)(b) in the Appendix of Rev. Proc. 2002-9. Scope

concrete footings, to classifying the gasoline pump canopies in

limitations do not apply to this change. See section 3.03 in the

asset class 57.0 of Rev. Proc. 87-56, 1987-2 C.B. 674, and to

Appendix of Rev. Proc. 2002-9.

classifying the supporting concrete footings in asset class 00.3

22. Certain uniform capitalization methods used by small

of Rev. Proc. 87-56. Complete Schedule E of Form 3115. See

resellers, formerly small resellers, and reseller-producers

Rev. Rul. 2003-54, 2003-23 I.R.B. 982.

(section 263A) — for qualifying applicants, to a qualifying

14. Depreciation of utility assets (sections 167, 168, and

method or methods. Complete Schedule D, Parts II and III, of

former section 168) — for depreciation of assets owned by a

Form 3115. Scope limitations do not apply in certain cases. See

utility used in general business operations, to classifying assets

sections 6.01 and 6.02 of Rev. Proc. 2002-54, and section

under Rev. Proc. 87-56,1987-2 C.B. 674, to conform with Rev.

4.01(5) in the Appendix of Rev. Proc. 2002-9.

Rul. 2003-81, 2003-30 I.R.B. 126. Complete Schedule E of

23. Certain uniform capitalization methods used by

Form 3115. See Rev. Rul. 2003-81.

producers and reseller-producers (section 263A) — for

15. Depreciation of cable TV fiber optics (sections 167

qualifying applicants, to a qualifying method or methods.

and 168) — for depreciation of fiber optic node and trunk line of

Complete Schedule D, Parts II and III, of Form 3115. The

a cable television distribution system, to a safe harbor method

applicant may request this change and designated automatic

for classifying the unit of property either as providing one-way

accounting method change numbers 77 (environmental

communication services or two-way communication services.

remediation costs) and 92 (allocation of environmental

See Rev. Proc. 2003-63, 2003-32 I.R.B. 304.

remediation costs to production) on a single Form 3115, but

16. Amortizable bond premium (section 171) — from

must comply with the ordering rules of Regulations section

amortizing bond premium to not amortizing the premium

1.263A-7(b)(2). See section 6.03 of Rev. Proc. 2002-54.

(revoking the section 171(c) election). Attach the statement

24. Research and experimental expenditures under

required by section 1C.01(4) in the Appendix of Rev. Proc.

uniform capitalization methods (section 263A) — from

2002-9. This change is made on a cut-off basis. See section

capitalizing research and experimental expenditures to

1C.01 in the Appendix of Rev. Proc. 2002-9.

inventory to no longer capitalizing these costs to inventory.

17. Research and experimental expenditures (section

Complete Schedule D, Part II, of Form 3115, as applicable.

174) — from the capitalization method to another permissible

Attach the statement required by section 4.04(2) in the

method, from the expense method to another permissible

Appendix of Rev. Proc. 2002-9. Audit protection does not apply

method, from the deferred expense method to another

to this change. The applicant may request this change and

permissible method, or from the current period of amortization

designated automatic accounting method change numbers 77

to a different period of amortization under the deferred expense

(environmental remediation costs) and 92 (allocation of

method. Attach the statement required by section 2A.01(4) in

environmental remediation costs to production) on a single

the Appendix of Rev. Proc. 2002-9. Audit protection does not

Form 3115, but must comply with the ordering rules of

apply to this change. This change is made on a cut-off basis.

Regulations section 1.263A-7(b)(2). See section 4.04 in the

See section 2A in the Appendix of Rev. Proc. 2002-9.

Appendix of Rev. Proc. 2002-9.

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Instructions For Form 3115 - Application For Change In Accounting Method - Internal Revenue Service - 2006 Page 10

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