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applicable Code section, of the applicant and other taxpayers,

distinct trades or businesses (for purposes of Regulations

as applicable.

section 1.446-1(d)), including QSUBs or single-member LLCs;

2. A common parent corporation requesting the identical

Part III—Information For Advance

accounting method change on a single Form 3115 on behalf of

two or more members of the consolidated group;

Consent Request

3. A common parent requesting the identical accounting

method change on a single Form 3115 on behalf of two or more

Advance Consent Request Scope Limitations

CFCs that do not engage in a trade or business within the

An applicant may not use the advance consent request

United States where all controlling U.S. shareholders of the

procedures if any of the following four scope limitations apply at

CFCs are members of the consolidated group; or

the time the Form 3115 would be filed with the IRS National

4. A taxpayer requesting an identical accounting method

Office. See Rev. Proc. 97-27 as modified by Rev. Proc.

change on a single Form 3115 on behalf of two or more CFCs

2002-19.

that do not engage in a trade or business within the United

States for which the taxpayer is the sole controlling U.S.

1. The change in accounting method is required to be made

shareholder of the CFCs.

pursuant to a published automatic change procedure. For more

information, see section 4.02(1) of Rev. Proc. 97-27.

If any of the situations listed above apply, the user fee in

2. The applicant is under examination, except as provided in

section (A)(3)(b)(i) or section (A)(4) of Appendix A of Rev. Proc.

section 4.02(2) of Rev. Proc. 97-27, as modified by Rev. Proc.

2006-1, as applicable, must be paid for the first member of the

2002-19.

consolidated group, CFC, or separate and distinct trade or

3. The applicant is (or was formerly) a member of a

business, and the reduced user fee in section (A)(5)(b) of

consolidated group that is under examination, or before an

Appendix A must be paid for each additional member of the

Appeals office, or before a Federal court for the tax year(s) the

group, CFC, or separate and distinct trade or business. If a filer

applicant was a member of the group. For more information,

qualifies for a reduced user fee under section (A)(5)(b) of

see section 4.02(5) of Rev. Proc. 97-27.

Appendix A, the filer must submit the additional information

4. In the case of a partnership or S corporation, the

required by section 15.07 of Rev. Proc. 2006-1. A user fee is

accounting method the applicant is requesting to change is an

only required for members of the group, CFCs, or separate and

issue under consideration in an examination, or by an Appeals

distinct trades or businesses requesting the accounting method

office, or before a Federal court with respect to a partner,

change. See section 15.07(4) of Rev. Proc. 2006-1 for what

member, or shareholder of the applicant. For more information,

qualifies as an identical accounting method change.

see section 4.02(6) of Rev. Proc. 97-27.

Filers whose gross income is less than the amounts

specified in (A)(4) in Appendix A of Rev. Proc. 2006-1 qualify

Line 18. If the requested change is covered by an automatic

for a reduced user fee. For the definition of gross income, see

change request procedure, and the procedure applies to the

(B)(2), (3), and (4) in Appendix A of Rev. Proc. 2006-1. If the

applicant for the requested year of change, the applicant is not

filer qualifies for the reduced user fee under this provision, the

eligible to file an advance consent request. If the requested

filer must attach to the Form 3115 the representation required

change is covered by an automatic change request procedure,

by (B)(1) in Appendix A of Rev. Proc. 2006-1.

explain why the applicant is requesting to make the change

under advance consent request procedures.

For information on user fees for tax-exempt organizations,

see Rev. Proc. 2006-8, 2006-1 I.R.B. 245 (or its successor).

Line 19. For further details on what is to be included in the

attachment, see sections 9.03(1) (facts and other information),

The user fee (check or money order payable to the Internal

9.03(4) (analysis of material facts), 7.01(8) and 9.03(1)

Revenue Service) must be attached to the Form 3115 that is

(statement of supporting authorities), 9.03(2) (statement of

filed with the IRS National Office.

contrary authorities), and 9.03(7) (statement identifying pending

Part IV—Section 481(a) Adjustment

legislation) of Rev. Proc. 2006-1.

Line 20. True copies of all contracts, agreements, and other

Line 24. Ordinarily, an adjustment under section 481(a) is

documents directly related to the proposed accounting method

required for accounting method changes. However, for certain

change must be submitted with the request. See section 9.03(3)

accounting method changes, the taxpayer must use the cut-off

of Rev. Proc. 2006-1.

method. In those cases there is no section 481(a) adjustment.

Line 21. For further details on what is to be included in the

Line 25. Attach a schedule showing the section 481(a)

attachment, see section 7.01(1)(d) and 9.03(1) of Rev. Proc.

adjustment for each applicant included in the Form 3115. This

2006-1.

schedule may be combined with the information requested on

the fourth line on page 1 (list of applicants and their

Line 23. Taxpayers filing under the advance consent request

identification numbers) and on line 23 (user fee). Include a

procedures must pay a user fee for each Form 3115. See

summary of the computation of the section 481(a) adjustment

Appendix A of Rev. Proc. 2006-1. (Taxpayers filing under an

and an explanation of the methodology used to determine it. If

automatic change request procedure do not pay a user fee.)

the section 481(a) adjustment is based on more than one

A separate user fee must be paid for each member of an

component of the accounting method being changed, include a

affiliated group and for each separate and distinct trade or

summary of the computation for each component. The

business of a taxpayer (including a QSUB or a single-member

summary of the computation and explanation of the section

LLC) to which the requested advance consent accounting

481(a) adjustment need not be extensive but should be

method change applies. If the filer is not requesting an advance

sufficient to demonstrate that the section 481(a) adjustment is

consent accounting method change for itself, a user fee for the

being computed correctly.

filer is not required.

Entering the PBA code in the box at the top of page 1

However, the reduced user fee in section (A)(5)(b) of

satisfies the requirement to submit the PBA code for each

Appendix A of Rev. Proc. 2006-1 applies in the following

applicant.

situations.

Example. Under its present method, XYZ Corporation is

1. A taxpayer requesting an identical accounting method

deducting certain costs that are required to be capitalized into

change on a single Form 3115 for two or more separate and

inventory under section 263A. XYZ Corporation is proposing to

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Instructions For Form 3115 - Application For Change In Accounting Method - Internal Revenue Service - 2006 Page 6

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