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Any other reasonable allocation method — Regulations

Information For Automatic Change Request, on page 1 of Form

section 1.263A-1(f)(4) (including the methods listed on page 8

3115.

under Allocating Direct and Indirect Costs).

1. Commodity Credit Corporation loans (section 77) —

for loans received from the Commodity Credit Corporation,

Schedule E—Change in Depreciation or

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

Amortization

loan. Scope limitations do not apply to this change. This change

All applicants requesting to change their method of depreciation

is made on a cut-off basis. See section 1.01 in the Appendix of

or amortization must complete Schedule E of Form 3115.

Rev. Proc. 2002-9.

Applicants changing their method of accounting for depreciation

2. Lawyers handling cases on a contingent fee basis

or amortization under the automatic change request procedures

(section 162) — from treating advances of money to their

should see the depreciation changes in the List of Automatic

clients for litigation costs as deductible business expenses to

Accounting Method Changes.

treating those advances as loans. See section 1A.01 in the

Appendix of Rev. Proc. 2002-9.

Do not file Form 3115:

3. ISO 9000 costs (section 162) — to treating the costs as

1. To make an election under sections 167, 168, 179, 1400I,

deductible, except to the extent they result in the creation or

1400L(b), 1400L(c), or 1400N(d), or former section 168,

acquisition of an asset having a useful life substantially beyond

2. To revoke an election made under one of those sections,

the tax year. Scope limitations do not apply to this change. See

3. To make or revoke an election under section 13261(g)(2)

section 1A.04 in the Appendix of Rev. Proc. 2002-9.

or (3) of the Revenue Reconciliation Act of 1993 (relating to

4. Restaurant smallwares costs (section 162) — to the

section 197 intangibles),

smallwares method described in Rev. Proc. 2002-12, 2002-3

4. To change the placed-in-service date,

I.R.B. 374 (that is, as materials and supplies that are not

5. To change the salvage value (except for a change in

incidental under Regulations section 1.162-3). Scope limitations

salvage value to zero when the salvage value is expressly

do not apply to this change. The entire section 481(a)

treated as zero by the Code, the regulations, or other published

adjustment must be taken into account in the year of change.

guidance), or

See section 1A.06 in the Appendix of Rev. Proc. 2002-9.

6. To change a useful life under section 167 (except for a

5. Bad debts (section 166) — for an applicant other than a

change to or from a useful life, recovery period, or amortization

bank, from accounting for bad debts using a reserve or other

period that is specifically assigned by the Code, the regulations,

improper method to a specific charge-off method that complies

or other published guidance).

with section 166. See section 1B.01 in the Appendix of Rev.

Proc. 2002-9.

6. Bad debt conformity for banks (section 166) — for

List of Automatic Accounting Method

banks other than new banks, to the method that conforms to

Changes

Regulations section 1.166-2(d)(3) for the first time the bank

makes this change, or to involuntarily revoke this method. This

Listed below are automatic accounting method changes

change does not fall under the procedures of Rev. Proc.

providing for the filing of Form 3115. The List of Automatic

2002-9. Instead, see Regulations section 1.166-2(d)(3).

Accounting Method Changes includes regulatory automatic

7. Depreciation or amortization (impermissible)

changes, changes provided for in the Appendix of Rev. Proc.

(sections 56, 167, 168, 197, 1400I, 1400L, and former

2002-9, and automatic changes provided for in other guidance.

section 168) — from an impermissible method to a permissible

These automatic changes may be modified or supplemented

method for changes allowed under Temporary Regulations

with additional automatic changes by subsequently published

section 1.446-1T(e)(2)(ii)(d), and for depreciable property

guidance.

owned at the beginning of the year of change. Complete

Note: The list provides a brief description of each automatic

Schedule E of Form 3115. Attach the statements required by

accounting method change that is included in the list. A

section 2.01(2)(b) in the Appendix of Rev. Proc. 2002-9, as

filer/applicant may not rely on the list or the descriptions of

modified by Rev. Proc. 2004-11, 2004-3 I.R.B. 311 (or

accounting method changes in the list as authority for making

successor), and Rev. Proc. 2005-43, 2005-29 I.R.B. 107.

an accounting method change. A filer/applicant that is within the

Certain scope limitations do not apply. An applicant changing its

scope of, and complies with, all the applicable provisions of the

method of accounting for depreciation because of a change

published guidance that authorizes each listed change may rely

described in designated automatic accounting method change

on the applicable published guidance as authority for its

number 10 (sale or lease transactions) must file the Form 3115

automatic accounting method change. If any information in the

in accordance with designated automatic accounting method

List of Automatic Accounting Method Changes conflicts with

change number 10. See section 2.01 in the Appendix of Rev.

published guidance, the published guidance applies.

Proc. 2002-9, as modified by Rev. Proc. 2003-50, 2003-29

I.R.B. 119, and Rev. Proc. 2004-11 (or successor), as modified

Each item in the list below:

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by Rev. Proc. 2005-43.

Designates an automatic accounting method change number

8. Depreciation (permissible) (sections 56 and 167) —

for each change for entry on line 1a of Form 3115.

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from a permissible method to another permissible method

Briefly describes the accounting method change.

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listed in section 2.02 in the Appendix of Rev. Proc. 2002-9, as

Indicates if scope limitation rules may not apply.

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modified by Rev. Proc. 2004-11, 2004-3 I.R.B. 311 (or

Indicates if audit protection may not apply.

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successor). Complete Schedule E of Form 3115. For public

Indicates in some cases which schedules of Form 3115 to

utility property, attach the statement required by section

complete.

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2.02(4)(d) in the Appendix of Rev. Proc. 2002-9. Certain scope

Indicates in some cases any additional reporting

limitations do not apply. The section 481(a) adjustment is zero.

requirements.

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See section 2.02 in the Appendix of Rev. Proc. 2002-9, as

Indicates in some cases if the change is made on a cut-off

modified by Rev. Proc. 2004-11 (or successor).

basis.

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Provides a reference to the basic published guidance (for

9. Post-disposition depreciation or amortization

example, revenue procedure) that provides for the automatic

(sections 56, 167, 168, 197, 1400I, and 1400L, and former

change, which filers should review prior to completing Part I,

section 168) — for an item of depreciable or amortizable

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Instructions For Form 3115 - Application For Change In Accounting Method - Internal Revenue Service - 2006 Page 9

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