Common use of Methods of Accounting Clause in Contracts

Methods of Accounting. (1) A PFA may not be used to obtain consent to change a taxpayer's method of accounting. Section 3.09(2) of this revenue procedure provides when the Service may enter into a PFA for issues relating to a change in method of accounting. Section 3.09(3) of this revenue procedure provides what change in accounting method issues may be addressed in a PFA. A change in method of accounting generally includes a change in an overall plan of accounting or a change in the treatment of any material item, which is any item that involves the proper time for the inclusion of the item in income or the taking of the item as a deduction, or both. See Rev. Proc. 2015-13, section 2. (2) When a change in method of accounting issue may be eligible for a (a) If the Service has issued a letter ruling granting consent to make a non-automatic change under Rev. Proc. 2015-13, or its predecessor or successor, a taxpayer may request and the Service may enter into a PFA with respect to the approved change in method of accounting. (b) If a taxpayer has timely filed the required copy of Form 3115 to request an automatic change under section 6.03(1)(a)(i)(B), 6.03(1)(a)(ii), or 6.03(1)(a)(iii) of Rev. Proc. 2015-13, or its predecessors or successors, the taxpayer may request, and the Service may enter into, a PFA with respect to the requested change in method of accounting. (3) What change in accounting method issues may be addressed in a PFA. (a) A PFA may include determinations described in section 12 of Rev. Proc. 2015-13 or a similar provision of its predecessor or successor. Thus, for example, a taxpayer may request and the Service may enter into a PFA with respect to the amount of the section 481(a) adjustment and the implementation of the change in method of accounting in accordance with all the applicable provisions for the change in method of accounting. (b) A PFA under this provision may only apply to the taxable year of change and may not apply to any other taxable years, except that a determination of the amount of the section 481(a) adjustment under section 7.02 of Rev. Proc. 2015-13, or a similar provision of its predecessor or successor, shall apply to any other taxable year for which such amount is taken into account (i.e., any spread period).