These synopses are intended only as aids to the reader in

Agency decision

Ask Donna

What actually matters in this document.

Text

HIGHLIGHTS

OF THIS ISSUE

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

INCOME TAX

Rev. Proc. 2025-23, page 1476.

Revenue Procedure 2025-23 updates the List of Automatic

Procedures as established in Treasury and IRS guidance

for taxpayer-initiated requests for changes in methods of

accounting. An “automatic change” is a change in method

of accounting for which the taxpayer is eligible under section

5.01(1) of Revenue Procedure 2015-13 for requesting the

Commissioner’s consent for the requested year of change.

Finding Lists begin on page ii.

Bulletin No. 2025–24

June 9, 2025

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

June 9, 2025

Bulletin No. 2025–24

Part I

26 CFR 601.204: Changes in accounting periods and in methods of accounting.

(Also Part I, §§ 56, 61, 77, 118, 162, 163, 166, 167, 168, 171, 174, 179D, 194, 195, 197, 248, 263, 263A, 267, 280F, 404, 446, 447, 448, 451, 454, 455, 460, 461, 467,

471, 472, 475, 481, 585, 709, 807, 816, 832, 833, 846, 860A-860G, 861, 904, 953, 985, 1272, 1273, 1278, 1281, 1363, 1400I, 1400L, 1400N; 1.61-1, 1.61-4, 1.618, 1.77-1, 1.77-2, 1.118-2, 1.162-1, 1.162-3, 1.162-4, 1.162-11, 1.162-12, 1.166-1, 1.166-2, 1.166-4, 1.167(a)-2, 1.167(a)-3(b), 1.167(a)-4, 1.167(a)-7, 1.167(a)-8,

1.167(a)-11, 1.167(a)-14, 1.167(e)-1, 1.168(d)-1, 1.168(i)-1, 1.168(i)-4, 1.168(i)-6, 1.168(i)-7, 1.168(i)-8, 1.168(k)-1, 1.168(k)-2, 1.171-4, 1.174-1, 1.174-3, 1.174-4,

1.179-5, 1.194-1, 1.195-1, 1.197-2, 1.248-1, 1.263(a)-1, 1.263(a)-2, 1.263(a)-3, 1.263(a)-4, 1.263(a)-5, 1.263A-1, 1.263A-2, 1.263A-3, 1.263A-4, 1.263A-7, 1.267(a)1, 1.280F-6, 1.404(b)-1T, 1.446-1, 1.446-1T, 1.446-2, 1.446-5, 1.446-6, 1.446-7, 1.448-1, 1.448-2, 1.451-1, 1.451-3, 1.451-8, 1.454-1, 1.455-6, 1.460-1, 1.460-3,

1.460-4, 1.461-1, 1.461-4, 1.461-5, 1.467-1, 1.471-1, 1.471-2, 1.471-3, 1.471-4, 1.471-5, 1.471-8, 1.472-1, 1.472-2, 1.472-6, 1.472-8, 1.481-1, 1.481-4, 1.709-1,

1.709-2, 1.832-4, 1.832-5, 1.860A-6, 1.861-18, 1.985-5, 1.985-8, 1.1016-3, 1.1245-3, 1.1272-1, 1.1273-1, 1.1273-2, 1.1275-2, 1.1363-2, 1.1374-4, 1.1400L(b)-1,

1.1502-68.)

Rev. Proc. 2025-23

LIST OF AUTOMATIC CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

SECTION 1. GROSS INCOME (§ 61). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

.01 Up-front Payments for Network Upgrades received by Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

SECTION 2. COMMODITY CREDIT LOANS (§ 77). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

.01 Treating amounts received as loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

SECTION 3. TRADE OR BUSINESS EXPENSES (§ 162). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

.01 Advances made by a lawyer on behalf of clients. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

.02 ISO 9000 Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

.03 Restaurant or tavern smallwares packages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

.04 Timber grower fertilization costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

.05 Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1482

.06 Repair and maintenance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1482

.07 Wireline network asset maintenance allowance and units of property methods of accounting under

Rev. Proc. 2011-27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1482

.08 Wireless network asset maintenance allowance and units of property methods of accounting under

Rev. Proc. 2011-28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1482

.09 Method of accounting under Rev. Proc. 2011-43 for taxpayers in the business of transporting, delivering,

or selling electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1482

.10 Method of accounting under Rev. Proc. 2013-24 for taxpayers in the business of generating steam or

electric power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1482

.11 Cable network asset capitalization methods of accounting under Rev. Proc. 2015-12. . . . . . . . . . . . . . . . . . . . . . . . . . . 1482

.12 Natural gas transmission and distribution property method of accounting under Rev. Proc. 2023-15. . . . . . . . . . . . . . . . 1483

SECTION 4. BAD DEBTS (§ 166). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1487

.01 Change from reserve method to specific charge-off method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1487

.02 Conformity election by bank after previous election automatically revoked. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1487

.03 Change to the allowance charge-off method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1488

SECTION 5. INTEREST EXPENSE (§ 163) AND AMORTIZABLE BOND PREMIUM (§ 171). . . . . . . . . . . . . . . . . . . . 1488

.01 Revocation of § 171(c) election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1488

.02 Change to comply with § 163(e)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1488

SECTION 6. DEPRECIATION OR AMORTIZATION (§§ 56(a)(1), 167, 168, 197, 280F(a), OR

1502, OR FORMER §§ 56(g)(4)(A), 168, 1400I, 1400L, OR 1400N(d)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1489

.01 Impermissible to permissible method of accounting for depreciation or amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . 1489

.02 Permissible to permissible method of accounting for depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1494

.03 Sale, lease, or financing transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1496

.04 Change in general asset account treatment due to a change in the use of MACRS property. . . . . . . . . . . . . . . . . . . . . . .1496

.05 Change in method of accounting for depreciation due to a change in the use of MACRS property. . . . . . . . . . . . . . . . . 1497

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.06 Depreciation of qualified non-personal use vans and light trucks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1498

.07 Impermissible to permissible method of accounting for depreciation or amortization for disposed depreciable or

amortizable property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1498

.08 Tenant construction allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1499

.09 Safe harbor method of accounting for determining the depreciation of certain tangible assets used by wireless

telecommunications carriers under Rev. Proc. 2011-22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1500

.10 Partial dispositions of tangible depreciable assets to which the IRS’s adjustment pertains (§ 168; § 1.168(i)-8). . . . . . . 1500

.11 Depreciation of leasehold improvements (§§ 167, 168, and 197; § 1.167(a)-4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1501

.12 Permissible to permissible method of accounting for depreciation of MACRS property (§ 168; §§ 1.168(i)-1,

1.168(i)-7, and 1.168(i)-8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1502

.13 Disposition of a building or structural component (§ 168; § 1.168(i)-8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1504

.14 Dispositions of tangible depreciable assets (other than a building or its structural components) (§ 168; § 1.168(i)-8). . 1508

.15 Dispositions of tangible depreciable assets in a general asset account (§ 168(i)(4); § 1.168(i)-1) . . . . . . . . . . . . . . . . . . 1510

.16 Summary of certain changes in methods of accounting related to dispositions of MACRS property. . . . . . . . . . . . . . . . 1512

.17 Depreciation of fiber optic transfer node and fiber optic cable used by a cable system operator (§§ 167 and 168). . . . . 1515

.18 Qualified improvement property placed in service after December 31, 2017 (§ 168). . . . . . . . . . . . . . . . . . . . . . . . . . . . 1515

.19 Certain late elections under §§ 168 and 1502 or revocation of certain elections under § 168 (§ 168(g)(7),

(k)(5), (k)(7), and (k)(10); §§ 1.168(k)-2 and 1.1502-68). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1516

.20 Change in depreciation as a result of applying the additional first year depreciation regulations (§ 168(k);

§§ 1.168(k)-2 and 1.1502-68). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1517

.21 Depreciation of tangible property under § 168(g) by controlled foreign corporations.. . . . . . . . . . . . . . . . . . . . . . . . . . . 1518

SECTION 7. RESEARCH AND EXPERIMENTAL EXPENDITURES (§ 174). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1519

.01 Change in Method of Accounting for SRE Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1519

SECTION 8. ELECTIVE EXPENSING PROVISIONS (§ 179D). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1520

.01 Deduction for Energy Efficient Commercial Buildings (§ 179D). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1520

SECTION 9. COMPUTER SOFTWARE EXPENDITURES (§§ 162, 167, AND 197). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1521

.01 Computer software expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1521

SECTION 10. START-UP EXPENDITURES AND ORGANIZATIONAL FEES (§§ 195, 248 AND 709). . . . . . . . . . . . . 1521

.01 Start-up expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1521

.02 Organizational expenditures under § 248. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1522

.03 Organization fees under § 709. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1522

SECTION 11. CAPITAL EXPENDITURES (§ 263). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1522

.01 Package design costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1522

.02 Line pack gas or cushion gas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1523

.03 Removal costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1523

.04 Distributor commissions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1523

.05 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1524

.06 Rotable spare parts safe harbor method.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1524

.07 Repairable and reusable spare parts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1524

.08 Tangible property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1525

.09 Railroad track structure expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1528

.10 Remodel-refresh safe harbor method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1528

SECTION 12. UNIFORM CAPITALIZATION (UNICAP) METHODS (§ 263A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1529

.01 Certain uniform capitalization (UNICAP) methods used by resellers and reseller-producers. . . . . . . . . . . . . . . . . . . . . .1529

.02 Certain uniform capitalization (UNICAP) methods used by producers and reseller-producers . . . . . . . . . . . . . . . . . . . . 1533

.03 Impact fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1534

.04 Change to capitalizing environmental remediation costs under § 263A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1534

.05 Change in allocating environmental remediation costs under § 263A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1534

.06 Safe harbor methods under § 263A for certain dealerships of motor vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1535

.07 Change to not apply § 263A to one or more plants removed from the list of plants that have a preproductive

period in excess of 2 years.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1535

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.08 Change to a reasonable allocation method described in § 1.263A-1(f)(4) for self-constructed assets . . . . . . . . . . . . . . . 1535

.09 Real property acquired through foreclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1536

.10 Sales-Based Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1536

.11 Treatment of Sales-Based Vendor Chargebacks under a Simplified Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1537

.12 U.S. ratio method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1537

.13 Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1538

.14 Interest capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1539

.15 Change to not apply § 263A to replanting costs for lost or damaged citrus plants pursuant to § 263A(d)(2)(C). . . . . . . 1539

.16 Small business taxpayer exception from requirement to capitalize costs under § 263A. . . . . . . . . . . . . . . . . . . . . . . . . . 1540

.17 Recharacterizing costs under the simplified resale method, simplified production method, or the modified

simplified production method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1540

SECTION 13. L OSSES, EXPENSES AND INTEREST WITH RESPECT TO TRANSACTIONS BETWEEN

RELATED TAXPAYERS (§ 267) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1541

.01 Change to comply with § 267. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1541

SECTION 14. DEFERRED COMPENSATION (§ 404). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1541

.01 Deferred compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1541

.02 Grace period contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1542

SECTION 15. METHODS OF ACCOUNTING (§ 446). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1542

.01 Change in overall method from the cash method, or from an accrual method with regard to purchases and

sales of inventories and the cash method for all other items, to an accrual method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1542

.02 Multi-year insurance policies for multi-year service warranty contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1544

.03 Nonaccrual-experience method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1544

.04 Interest accruals on short-term consumer loans—Rule of 78’s method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1545

.05 Film producer’s treatment of certain creative property costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1545

.06 Deduction of incentive payments to health care providers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1546

.07 Change by bank for uncollected interest.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1546

.08 Change from the cash method to an accrual method for specific items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1546

.09 Multi-year service warranty contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1547

.10 Overall cash method for specified transportation industry taxpayers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1547

.11 Change to overall cash/hybrid method for certain banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1549

.12 Change to overall cash method for farmers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1550

.13 Nonshareholder contributions to capital under § 118. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1550

.14 Debt issuance costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1550

.15 Transfers of interties under the safe harbor described in Notice 2016-36 (§ 118).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1550

.16 Change to or from the net asset value (NAV) method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1551

.17 Small business taxpayer changing the overall method of accounting to the cash method, or to a method of

accounting in which a small business taxpayer uses an accrual method for purchases and sales of inventories

and uses the cash method for computing all other items of income and expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1551

SECTION 16. TAXABLE YEAR OF INCLUSION (§ 451). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1553

.01 Accrual of interest on nonperforming loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1553

.02 Advance rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1553

.03 State or local income or franchise tax refunds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1553

.04 Capital Cost Reduction Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1553

.05 Credit card annual fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1553

.06 Retainages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1554

.07 Change in applicable financial statements (AFS) for purposes of applying certain revenue recognition

methods of accounting.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1554

.08 Changes in the timing of income recognition under § 451(b) and (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1555

SECTION 17. OBLIGATIONS ISSUED AT DISCOUNT (§ 454). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1561

.01 Series E, EE or I U.S. savings bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1561

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SECTION 18. PREPAID SUBSCRIPTION INCOME (§ 455). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1561

.01 Prepaid subscription income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1561

SECTION 19. SPECIAL RULES FOR LONG-TERM CONTRACTS (§ 460) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1562

.01 Small business taxpayer exceptions from requirement to account for certain long-term contracts under § 460 or to

capitalize costs under § 263A for certain home construction contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1562

.02 Change to rely on the interim guidance provided in section 8 of Notice 2023-63, 2023-39 I.R.B. 919. . . . . . . . . . . . . . 1562

SECTION 20. TAXABLE YEAR INCURRED (§ 461) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1563

.01 Timing of incurring liabilities for employee compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1563

(1) Self-insured employee medical benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1563

(2) Bonuses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1563

(3) Vacation pay, sick pay, and severance pay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1564

(4) Commissions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1564

.02 Timing of incurring liabilities for real property taxes, personal property taxes, state income taxes, and

state franchise taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1565

.03 Timing of incurring liabilities under a workers’ compensation act, tort, breach of contract, or violation of law. . . . . . . 1565

.04 Timing of incurring certain liabilities for payroll taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1565

.05 Cooperative advertising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1566

.06 Timing of incurring certain liabilities for services or insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1566

.07 Rebates and allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1567

.08 Ratable accrual of real property taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1567

.09 California Franchise Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1567

.10 Gift cards issued as a refund for returned goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1567

.11 Timing of incurring liabilities under the recurring item exception to the economic performance rules. . . . . . . . . . . . . . 1567

.12 Economic performance safe harbor for ratable service contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1568

.13 Alternative Cost Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1568

SECTION 21. RENT (§ 467) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1569

.01 Change from an improper method of inclusion of rental income or expense to inclusion in accordance with

the rent allocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1569

SECTION 22. INVENTORIES (§ 471). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1569

.01 Cash discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1569

.02 Estimating inventory “shrinkage.”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1570

.03 Qualifying volume-related trade discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1570

.04 Impermissible methods of identification and valuation of inventories.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1571

.05 Core Alternative Valuation Method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1571

.06 Replacement cost for automobile dealers’ parts inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1571

.07 Replacement cost for heavy equipment dealers’ parts inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1572

.08 Rotable spare parts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1572

.09 Advance Trade Discount Method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1572

.10 Permissible methods of identification and valuation of inventories.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1572

.11 Change in the official used vehicle guide utilized in valuing used vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1573

.12 Invoiced advertising association costs for new vehicle retail dealerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1573

.13 Rolling-average method of accounting for inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1573

.14 Sales-Based Vendor Chargebacks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1574

.15 Certain changes to the cost complement of the retail inventory method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1574

.16 Certain changes within the retail inventory method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1574

.17 Change from currently deducting inventories to permissible methods of identification and valuation of inventories.. . . 1574

.18 Small business taxpayer § 471(c) inventory methods.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1575

.19 Changes within a § 471(c) inventory method.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1575

.20 Change from a small business taxpayer § 471(c) inventory method to an inventory method under § 471(a).. . . . . . . . . 1576

SECTION 23. LAST-IN, FIRST-OUT (LIFO) INVENTORIES (§ 472). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1576

.01 Change from the LIFO inventory method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1576

.02 Determining current-year cost under the LIFO inventory method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1577

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.03 Alternative LIFO inventory method for retail automobile dealers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1578

.04 Used vehicle alternative LIFO method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1578

.05 Determining the cost of used vehicles purchased or taken as a trade-in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1579

.06 Change to the inventory price index computation (IPIC) method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1579

.07 Changes within the inventory price index computation (IPIC) method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1580

.08 Changes to the Vehicle-Pool Method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1581

.09 Changes within the used vehicle alternative LIFO method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1581

.10 Changes to dollar-value pools of manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1581

SECTION 24. MARK-TO-MARKET ACCOUNTING METHOD (INCLUDING § 475) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1581

.01 Commodities dealers, securities traders, and commodities traders electing to use the mark-to-market method of

accounting under § 475(e) or (f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1581

.02 Taxpayers requesting to change their method of accounting from the mark-to-market method of accounting

described in § 475 to a realization method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1582

SECTION 25. BANK RESERVES FOR BAD DEBTS (§ 585). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1584

.01 Changing from the § 585 reserve method to the § 166 specific charge-off method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1584

SECTION 26. INSURANCE COMPANIES (§§ 807, 816, 832, 833). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1585

.01 Safe harbor method of accounting for premium acquisition expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1585

.02 Certain changes in method of accounting for organizations to which § 833 applies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1586

.03 Change in qualification as life/nonlife insurance company under § 816. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1586

.04 Changes in basis of computing reserves under § 807(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1586

SECTION 27. DISCOUNTED UNPAID LOSSES (§ 846). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1588

.01 Composite method for discounting unpaid losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1588

SECTION 28. REAL ESTATE MORTGAGE INVESTMENT CONDUIT (REMIC) (§§ 860A-860G) . . . . . . . . . . . . . . . . 1588

.01 REMIC Inducement Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1588

SECTION 29. FUNCTIONAL CURRENCY (§ 985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1589

.01 Change in functional currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1589

SECTION 30. ORIGINAL ISSUE DISCOUNT (§§ 1272, 1273). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1589

.01 De minimis original issue discount (OID). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1589

.02 Proportional method of accounting for OID on a pool of credit card receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1589

SECTION 31. MARKET DISCOUNT BONDS (§ 1278). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1590

.01 Revocation of § 1278(b) election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1590

SECTION 32. SHORT-TERM OBLIGATIONS (§ 1281). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1590

.01 Interest income on short-term obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1590

.02 Stated interest on short-term loans of cash method banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1590

EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1591

EFFECT ON OTHER DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1592

PAPERWORK REDUCTION ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1593

SIGNIFICANT CHANGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1593

DRAFTING INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1595

LIST OF AUTOMATIC CHANGES CONTACT LIST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1596

June 9, 2025

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Bulletin No. 2025–24

This revenue procedure provides the

List of Automatic Changes to which the

automatic change procedures in Rev.

Proc. 2015-13, 2015-5 I.R.B. 419, as clarified and modified by Rev. Proc. 2015-33,

2015-24 I.R.B. 1067, and as modified by

Rev. Proc. 2021-34, 2021-35 I.R.B. 337,

by Rev. Proc. 2021-26, 2021-22 I.R.B.

1163, by Rev. Proc. 2017-59, 2017-48

I.R.B. 543, and by section 17.02(b) and

apply. The definitions in section 3 of Rev.

Proc. 2015-13 apply to this revenue procedure.

LIST OF AUTOMATIC CHANGES

SECTION 1. GROSS INCOME (§ 61)

.01 Up-front Payments for Network

Upgrades received by Utilities.

(1) Description of change. This change

applies to a Utility that wants to change its

method of accounting for Up-front Payments to the safe harbor method described

in Rev. Proc. 2005-35, 2005-2 C.B. 76. In

general, this change applies to a Utility

that receives an Up-front Payment from

a Generator to finance Network Upgrades

to the Utility’s Transmission System.

For federal income tax purposes, if an

Up-front Payment is made pursuant to

an Interconnection Agreement that satisfies all of the conditions of section 5.02

of Rev. Proc. 2005-35, a Utility may treat

that Up-front Payment as not being taxable income under § 61 when received

(the safe harbor method). In addition, a

Utility that uses the safe harbor method is

not entitled to any deduction for its reimbursements of the Up-front Payment. To

the extent that Federal Energy Regulatory

Commission (FERC) interest is deductible, it must be properly allocated to the

periods in which it accrues. A Utility

using the safe harbor method must comply with all other applicable provisions of

Rev. Proc. 2005-35. See Rev. Proc. 200535 for the definitions of certain terms for

purposes of this change.

(2) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

1.01 is “91.”

(3) Contact information. For further

information regarding a change under this

Bulletin No. 2025–24

section, contact William E . Blanchard at

(202) 317-3900 (not a toll-free number) .

SECTION 2 . COMMODITY CREDIT

LOANS (§ 77)

.01 Treating amounts received as

loans .

(1) Description of change . This

change applies to a taxpayer that wants to

change its method of accounting for loans

received from the Commodity Credit Corporation from including the loan amount

in gross income for the taxable year in

which each loan is received to treating

each loan amount as a loan .

(2) Certain eligibility rule inapplicable . The eligibility rule in section 5 .01(1)

(f) of Rev . Proc . 2015-13, 2015-5 I .R .B .

419, does not apply to this change .

(3) Manner of making change . This

change is made on a cut-off basis and

applies only to loans received from the

Commodity Credit Corporation on or

after the beginning of the year of change .

Accordingly, a § 481(a) adjustment is neither permitted nor required .

(4) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change under this section

2 .01 is “1 .”

(5) Contact information . For further

information regarding a change under this

section, contact Michael Finn at (202)

317-4718 (not a toll-free number) .

SECTION 3 . TRADE OR BUSINESS

EXPENSES (§ 162)

.01 Advances made by a lawyer on

behalf of clients .

(1) Description of change . This change

applies to a lawyer who advances money

to pay for costs of litigation or for other

expenses on behalf of clients, and who

wants to change the method of accounting for such advances from treating them

as deductible business expenses to treating them as loans to clients . This change

applies to cases handled either on a

non-contingent or a contingent fee basis .

See Pelton & Gunther, P.C. v. Commissioner, T .C . Memo . 1999-339 (non-contingent fee); Canelo v. Commissioner, 53

T .C . 217 (1969), aff’d per curiam, 447

F .2d 484 (9th Cir . 1971) (contingent fee) .

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(2) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change under this section

3 .01 is “2 .”

(3) Contact information . For further

information regarding a change under this

section, contact Alicia Lee-Won at (202)

317-7003 (not a toll-free number) .

.02 ISO 9000 costs .

(1) Description of change . This change

applies to a taxpayer that wants to change

its method of accounting for costs incurred

to obtain, maintain, and renew ISO 9000

certification to conform with Rev. Rul.

2000-4, 2000-1 C.B. 331, as modified by

this revenue procedure .

(2) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change under this section

3 .02 is “3 .”

(3) Contact information . For further

information regarding a change under this

section, contact Alicia Lee-Won at (202)

317-7003 (not a toll-free number) .

.03 Restaurant or tavern smallwares

packages .

(1) Description of change . This change

applies to a taxpayer engaged in the trade

or business of operating a restaurant or

tavern (within the meaning of section

4 .01 of Rev . Proc . 2002-12, 2002-1 C .B .

374) that wants to change its method of

accounting for the costs of smallwares to

the smallwares method described in Rev .

Proc. 2002-12, as modified by this revenue procedure .

(2) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change under this section

3 .03 is “4 .”

(3) Contact information . For further

information regarding a change under

this section, contact Benjamin Masselli at

(202) 317-7003 (not a toll-free number) .

.04 Timber grower fertilization costs .

(1) Description of change . This change

applies to a timber grower that wants to

change its method of accounting to treat

post-establishment fertilization costs of

an established timber stand as ordinary

and necessary business expenses deductible under § 162 . See Rev . Rul . 2004-62,

2004-1 C.B. 1072, as modified by this revenue procedure .

June 9, 2025

(2) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

3.04 is “86.”

(3) Contact information. For further

information regarding a change under this

section, contact Maria Castillo Valle at

(202) 317-7003 (not a toll-free number).

.05 Materials and supplies. See section

11.08 of this revenue procedure.

.06 Repair and maintenance costs. See

section 11.08 of this revenue procedure.

.07 Wireline network asset maintenance allowance and units of property

methods of accounting under Rev. Proc.

2011-27.

(1) Description of change. This change

applies to a wireline telecommunications

carrier that is within the scope of Rev.

Proc. 2011-27, 2011-18 I.R.B. 740, and

wants to change its treatment of wireline

network asset expenditures to use either

(a) the wireline network asset maintenance allowance method of accounting,

or (b) all or some of the units of property

described in Rev. Proc. 2011-27.

(2) Section 481(a) adjustment. In general, a change to the wireline network

asset maintenance allowance method of

accounting or to use all or some of the units

of property specified in Rev. Proc. 201127 requires an adjustment under § 481(a).

The § 481(a) adjustment shall not include

any amount attributable to property for

which the taxpayer elected to apply the

repair allowance under § 1.167(a)-11(d)

(2) for any taxable year in which the election was made.

(3) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

3.07 is “158.”

(4) Contact information. For further

information regarding a change under this

section, contact Ian Heminsley at (202)

317-5100 (not a toll-free number).

.08 Wireless network asset maintenance allowance and units of property

methods of accounting under Rev. Proc.

2011-28.

(1) Description of change. This change

applies to a wireless telecommunications

carrier that is within the scope of Rev.

Proc. 2011-28, 2011-18 I.R.B. 743, and

wants to change its treatment of wireless

June 9, 2025

network asset expenditures to use either

(a) the wireless network asset maintenance allowance method of accounting,

or (b) all or some of the units of property

described in Rev. Proc. 2011-28.

(2) Section 481(a) adjustment. In general, a change to the wireless network

asset maintenance allowance method of

accounting or to use all or some of the units

of property specified in Rev. Proc. 201128 requires an adjustment under § 481(a).

The § 481(a) adjustment does not include

any amount attributable to property for

which the taxpayer elected to apply the

repair allowance under § 1.167(a)-11(d)

(2) for any taxable year in which the election was made.

(3) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

3.08 is “159.”

(4) Contact information. For further

information regarding a change under this

section, contact Riston Escher at (202)

317-5100 (not a toll-free number).

.09 Method of accounting under Rev.

Proc. 2011-43 for taxpayers in the business of transporting, delivering, or selling

electricity.

(1) Description of change. This change

applies to a taxpayer that is within the

scope of Rev. Proc. 2011-43, 2011-37

I.R.B. 326, and wants to change its treatment of transmission and distribution

property expenditures to use the method

of accounting described in Rev. Proc.

2011-43.

(2) Section 481(a) adjustment. A taxpayer must take the entire net § 481(a)

adjustment into account (whether positive

or negative) in computing taxable income

for the year of change. The § 481(a)

adjustment does not include any amount

attributable to property for which the taxpayer elected to apply the repair allowance under § 1.167(a)-11(d)(2) for any

taxable year in which the election was

made. For guidance regarding permissible § 481(a) calculation methodologies,

see section 7.02 and Appendix A of Rev.

Proc. 2011-43.

(3) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

3.09 is “160.”

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(4) Contact information. For further

information regarding a change under this

section, contact Riston Escher at (202)

317-5100 (not a toll-free number).

.10 Method of accounting under Rev.

Proc. 2013-24 for taxpayers in the business of generating steam or electric

power.

(1) Description of change. This change

applies to a taxpayer that is within the

scope of Rev. Proc. 2013-24, 2013-22

I.R.B. 1142, and wants to change its treatment of generation property expenditures

to use all or some of the unit of property

definitions and the corresponding major

component definitions described in Rev.

Proc. 2013-24.

(2) Section 481(a) adjustment.

(a) A taxpayer must take the entire net

§ 481(a) adjustment into account (whether

positive or negative) in computing taxable

income for the year of change. For guidance regarding the use of extrapolation in

computing a § 481(a) adjustment, see section 6.02 and Appendix B of Rev. Proc.

2013-24.

(b) A taxpayer changing to this method

of accounting must not include in the

§ 481(a) adjustment any amount attributable to property for which the taxpayer

elected to apply the repair allowance

under § 1.167(a)–11(d)(2) for any taxable

year in which the repair allowance election was made.

(3) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

3.10 is “182.”

(4) Contact information. For further

information regarding a change under

this section, contact Morgan Lawrence at

(202) 317-7011 (not a toll-free number).

.11 Cable network asset capitalization

methods of accounting under Rev. Proc.

2015-12.

(1) Description of change. This change

applies to a cable system operator that is

within the scope of Rev. Proc. 2015-12,

2015-2 I.R.B. 266, and wants to make

one or more of the following changes in

method of accounting:

(a) Change its treatment of cable network asset expenditures to the cable

network asset maintenance allowance

method of accounting provided in section

5 of Rev. Proc. 2015-12;

Bulletin No. 2025–24

(b) Change to use any of the unit of

property definitions provided in section 6

of Rev. Proc. 2015-12;

customer drop costs described in section

7.01(1) of Rev. Proc. 2015-12;

(d) Change to use the safe harbor

allocation method for installations and

customer drop costs described in section

7.01(2) of Rev. Proc. 2015-12; or

(e) Change to deduct the labor costs

associated with installing customer premises equipment under section 7.02 of Rev.

Proc. 2015-12.

(2) Concurrent automatic change. A

taxpayer that wants to make one or more

changes in method of accounting pursuant to this section 3.11 and a change to

a UNICAP method under section 12 of

this revenue procedure for the same year

of change should file a single Form 3115

that includes all of these changes and must

enter the designated automatic accounting

method change numbers for all of these

changes on the appropriate line on the

Form 3115. See section 6.03(1)(b) of Rev.

Proc. 2015-13 for information on making

concurrent changes.

(3) Section 481(a) adjustment.

(a) In general, a change to one or

more of the changes in method of

accounting described in section 3.11(1)

of this revenue procedure requires an

adjustment under § 481(a). The § 481(a)

adjustment shall not include any amount

attributable to property for which the

taxpayer elected to apply the repair

allowance under § 1.167(a)-11(d)(2) for

any taxable year in which the election

was made.

(b) Itemized listing on Form 3115. The

taxpayer must include on Form 3115 (Rev.

December 2022), Part IV, line 26, the total

§ 481(a) adjustment for all changes in

methods of accounting being made. If the

taxpayer is making more than one change

in method of accounting under Rev. Proc.

2015-12, the taxpayer must include on an

attachment to Form 3115:

(i) the information required by Part

IV, line 26 for each change in method of

accounting (including the amount of the

§ 481(a) adjustment for each change in

method of accounting, which includes the

portion of the § 481(a) adjustment attributable to UNICAP);

Bulletin No. 2025–24

(ii) the information required by Part

II, line 14 of Form 3115 that is associated

with each change; and

(iii) the citation to the paragraph of

Rev. Proc. 2015-12 that provides for each

proposed method of accounting.

(4) Designated automatic accounting method change number. The designated automatic accounting method

change number for a change to a method

of accounting provided in section 5 or 6

of Rev. Proc. 2015-12 is “208.” The designated automatic accounting method

change number for a change to a method

of accounting provided in section 7 of

Rev. Proc. 2015-12 is “209.”

(5) Contact information. For further

information regarding a change under this

section, contact Riston Escher at (202)

317-5100 (not a toll-free number).

.12 Natural gas transmission and distribution property method of accounting

under Rev. Proc. 2023-15.

(1) Description of change.

(a) Applicability. This change applies

to a taxpayer that is within the scope of

Rev. Proc. 2023-15 and wants to change

its treatment of natural gas transmission

and distribution property costs to use the

natural gas transmission and distribution

property safe harbor method of accounting (NGSH Method) described in Rev.

Proc. 2023-15. Specifically, this change

applies to a taxpayer that wants to change

to “the safe harbor method for linear

property” or “the safe harbor method for

non-linear property” and other applicable rules in accordance with Rev. Proc.

2023-15, including the making of a late

general asset account election as required

under section 5.08(2) of Rev. Proc. 202315. This change also applies to a taxpayer

that previously changed to the safe harbor method for linear property and wants

to change to the safe harbor method for

non-linear property for a subsequent taxable year.

(b) Inapplicability. This change does

not apply to the making of a late general

asset account election other than in accordance with section 5.08(2) of Rev. Proc.

2023-15.

(2) Certain eligibility rules temporarily

inapplicable.

(a) In general. The eligibility rules in

section 5.01(1)(d) and (f) of Rev. Proc.

2015-13 do not apply to a taxpayer that

1483

changes to the NGSH Method provided

in Rev. Proc. 2015-13 for its first, second,

or third taxable year ending after May 1,

2023.

(b) Concurrent automatic change.

(i) If a taxpayer makes both a change

under this section 3.12 and a change under

section 6.12(3)(b) and/or section 6.15 of

this revenue procedure for linear property

and/or non-linear property for its first,

second, or third taxable year ending after

May 1, 2023, on a single Form 3115 for

the same asset for the same year of change

in accordance with section 3.12(6)(b)

of this revenue procedure, the eligibility

rules in section 5.01(1)(d) and (f) of Rev.

Proc. 2015-13 do not apply to the taxpayer

for these changes.

(ii) If a taxpayer makes both a change

under this section 3.12 and a change under

section 11.08, 12.01, 12.02, 12.08, and/or

12.12 of this revenue procedure, as applicable, for its linear property or non-linear

property costs in its first, second, or third

taxable year ending after May 1, 2023, on

a single Form 3115 for the same year of

change in accordance with section 3.12(6)

Rev. Proc. 2015-13 do not apply to the

taxpayer for these changes.

(3) Manner of making change.

(a) Late general asset account election.

(i) The late general asset account election change described in section 5.08(2)

of Rev. Proc. 2023-15 is made using a

modified cut-off method under which

the unadjusted depreciable basis and

the depreciation reserve of the asset as

of the beginning of the year of change

are accounted for using the proposed

method of accounting. The late general

asset account election change requires

each general asset account to include a

beginning balance for both the unadjusted depreciable basis and the depreciation reserve. The beginning balance for

the unadjusted depreciable basis of each

general asset account is equal to the sum

of the unadjusted depreciable bases as of

the beginning of the year of change for

all assets included in that general asset

account. The beginning balance of the

depreciation reserve of each general asset

account is equal to the sum of the greater

of the depreciation allowed or allowable

as of the beginning of the year of change

June 9, 2025

for all assets included in that general

asset account.

(ii) For the late general asset account

election change described in section

5.08(2) of Rev. Proc. 2023-15, the taxpayer must attach to its Form 3115 a statement providing that the taxpayer agrees to

the following additional terms and conditions:

(A) The taxpayer consents to, and

agrees to apply, all the provisions of

§ 1.168(i)-1 to the assets that are subject

to the election specified in section 5.08(2)

of Rev. Proc. 2023-15; and

(B)

Except

provided

§ 1.168(i)-1(c)(1)(ii)(A), (e)(3), (g), or (h),

the election made by the taxpayer under

section 5.08(2) of Rev. Proc. 2023-15 is

irrevocable and will be binding on the taxpayer for computing taxable income for

the year of change and for all subsequent

taxable years with respect to the assets

that are subject to this election.

(b) Cut-off basis for certain changes.

Except for changes to make a late general

asset account election described in section

3.12(3)(a) of this revenue procedure, a

change to the NGSH Method described in

Rev. Proc. 2023-15 is made on a cut-off

basis and applies only to natural gas transmission and distribution property costs

paid or incurred beginning in or after the

year of change if(i) Sections 5.08(2)(a)(ii) and 6.04 of

Rev. Proc. 2023-15 apply (the taxpayer

changes to the NGSH Method described

in Rev. Proc. 2023-15 for the first, second,

or third taxable year ending after May 1,

2023, on a cut-off basis); or

(ii) Section 5.08(2)(a)(iii) of Rev. Proc.

2023-15 applies (the taxpayer changes to

the NGSH Method described in Rev. Proc.

2023-15 for the fourth taxable year ending

after May 1, 2023, or for any subsequent

taxable year).

described in Rev. Proc. 2023-15 applies

to any asset that is public utility property within the meaning of § 168(i)(10),

the taxpayer must attach a statement to

its Form 3115 agreeing to the following

additional terms and conditions:

(i) A normalization method of accounting (within the meaning of § 168(i)(9))

will be used for the public utility property

subject to the Form 3115;

June 9, 2025

(ii) As of the beginning of the year

of change, the taxpayer will adjust its

deferred tax reserve account or similar

account in the taxpayer’s regulatory books

of account by the amount of the deferral

of federal income tax liability associated

with the § 481(a) adjustment applicable

to the public utility property subject to the

Form 3115 if such amount is no longer

being normalized for regulatory purposes

by the taxpayer; and

(iii) Within 30 calendar days of filing

the federal income tax return for the year

of change, the taxpayer will provide a

copy of the completed Form 3115 to any

regulatory body having jurisdiction over

the public utility property subject to the

Form 3115.

(4) Section 481(a) adjustment.

(a) In general. Except as provided in

section 3.12(3)(b) of this revenue procedure, a taxpayer changing its methods of

accounting under this section 3.12 must

take the entire net § 481(a) adjustment

into account, whether positive or negative, in computing taxable income for

the year of change in the manner provided in section 7.03 of Rev. Proc. 201513. The entire net § 481(a) adjustment

includes all aspects of the NGSH Method

described in Rev. Proc. 2023-15, including a change to the methods of accounting permitted under § 1.168(i)-1 pursuant

to section 5.08(2) of Rev. Proc. 2023-15.

However, a § 481(a) adjustment is neither required nor permitted for the late

general asset account election described

in section 5.08(2) of Rev. Proc. 2023-15.

Further, a § 481(a) adjustment is neither

required nor permitted if the taxpayer

chooses to change to the NGSH Method

on a cut-off basis under section 6.04 of

Rev. Proc. 2023-15 or if the taxpayer

changes to this method during the time

described in section 5.08(2)(a)(iii) of

Rev. Proc. 2023-15.

(b) Repair allowance property. A taxpayer changing its method of accounting

under this section 3.12 must not include

in the § 481(a) adjustment any amount

attributable to property for which the taxpayer elected to apply the repair allowance under § 1.167(a)-11(d)(2) for any

taxable year in which the repair allowance

election was made.

to capitalize repair and maintenance

1484

costs. A taxpayer changing its method of

accounting under this section 3.12 must

not include in the § 481(a) adjustment

any amount attributable to property for

which the taxpayer elected to capitalize repair and maintenance costs under

§ 1.263(a)-3(n) for any taxable year in

which this election was made.

(d) Statistical sampling. A taxpayer

changing to the NGSH Method under this

section 3.12 may use statistical sampling

in determining the § 481(a) adjustment

amount attributable to any single taxable

year by following the guidance provided

in Rev. Proc. 2011-42, 2011-37 I.R.B.

318.

(e) Extrapolation. A taxpayer changing

to the NGSH Method under this section

3.12 may use the extrapolation methodology provided in Appendix B to Rev. Proc.

2023-15 (Appendix B) in determining the

§ 481(a) adjustment amount if the taxpayer is within the scope of section 1.02

of Appendix B. Extrapolation methodologies not permitted in Appendix B are not

permitted under the NGSH Method.

(5) No audit protection for certain taxpayers. If a taxpayer chooses to change

to the NGSH Method described in Rev.

Proc. 2023-15 on a cut-off basis as permitted under section 6.04 of Rev. Proc.

2023-15 or is required to change on a cutoff basis under section 5.08(3)(b)(i) of

Rev. Proc. 2023-15, the taxpayer does not

receive audit protection under section 8.01

of Rev. Proc. 2015-13 in connection with

this change.

(6) Concurrent automatic changes.

(a) A taxpayer making changes under

this section 3.12 for more than one asset

for the same year of change must file a single Form 3115 for all such assets. The single Form 3115 must provide a single net

§ 481(a) adjustment for all such changes.

(b) A taxpayer making changes under

this section 3.12 and changes under section 6.12(3)(b) and/or section 6.15 of this

revenue procedure for linear property or

non-linear property costs for the same

year of change must file a single Form

3115 for all changes and must enter the

designated automatic accounting method

change numbers for all changes on the

appropriate line on the Form 3115. See

section 6.03(1)(b) of Rev. Proc. 2015-13

for information on making concurrent

changes.

Bulletin No. 2025–24

this section 3.12 and also making a coordinating change to its linear property or

non-linear property costs under section

11.08, 12.01, 12.02, 12.08, and/or 12.12

of this revenue procedure, as applicable,

must file a single Form 3115 for the same

year of change for all these changes, provided that the taxpayer is not prohibited

from filing an automatic change under

the eligibility rules under section 5 of

Rev. Proc. 2015-13. For changes required

to be filed on a single Form 3115 under

this section, the taxpayer must enter the

designated automatic accounting method

change numbers for all changes on the

appropriate line on the Form 3115. See

section 6.03(1)(b) of Rev. Proc. 2015-13

for information on making concurrent

changes.

(d) A taxpayer that changes to a method

of accounting under this section 3.12 for

taxable years ending after the third taxable year ending after May 1, 2023 and

is also required to change its method of

accounting to properly capitalize its linear property or non-linear property costs

under § 263(a) and/or § 263A under section 5.08(3)(b)(ii) of Rev. Proc. 2023-15,

must file a single Form 3115 for the same

year of change for all these changes, provided that the taxpayer is not prohibited

from filing an automatic change under the

eligibility rules set out in section 5 of Rev.

Proc. 2015-13, 2015-5 I.R.B. 419. For

changes required to be filed on a single

Form 3115 under this paragraph, the taxpayer must enter the designated automatic

accounting method change numbers for

all changes on the appropriate line on the

Form 3115. See section 6.03(1)(b) of Rev.

Proc. 2015-13 for information on making

concurrent changes.

(7) Examples. The following examples illustrate this section 3.12. In each

example, it is assumed that the taxpayer

(a) is a C corporation, on an accrual

method of accounting and using a calendar taxable year, (b) is within the scope

of Rev. Proc. 2023-15, (c) placed in service natural gas transmission property

or distribution property that is described

in section 4 of Rev. Proc. 2023-15 and

is MACRS property, (d) did not make

a general asset account election for any

natural gas transmission property or distribution property placed in service by

Bulletin No. 2025–24

the taxpayer in any taxable year before

the first taxable year that the taxpayer

uses the NGSH Method, (e) is changing

its methods of accounting for both linear

property and non-linear property under

the NGSH Method for the same taxable

year, and (f) is not changing to the NGSH

Method on a cut-off basis under section

6.04 of Rev. Proc. 2023-15. Unless otherwise stated, it also is assumed that (a)

the cost of the replacements before Year

1 were not capitalized under § 263(a),

(b) the cost of the replacements before

Year 1 would not have been capitalized

if the taxpayer used the NGSH Method

provided under sections 5.02, 5.03, 5.04,

5.06, and 5.07 of Rev. Proc. 2023-15

for such prior taxable years, and (c) the

taxpayer’s natural gas transmission and

distribution property expenditures are

not per se capital expenditures under

section 5.05(1)(a)-(f), (i), or (j) of Rev.

Proc. 2023-15. Further, it is assumed

that § 1.168(i)-1(e)(3) (special rules for

certain dispositions of assets in general

asset accounts) does not apply for the

first taxable year that the taxpayer uses

the NGSH Method. Moreover, for purposes of these examples, “Year 1” refers

to the taxpayer’s first taxable year ending

after May 1, 2023, “Year 2” refers to the

taxpayer’s second taxable year ending

after May 1, 2023, and “Year 4” refers to

the taxpayer’s fourth taxable year ending

after May 1, 2023.

(a) Example 1. (i) X is a local natural gas distribution company. Before Year 1, X owned and placed

in service natural gas distribution property at a cost

of $120 million before any dispositions or additions.

Before Year 1, X replaced parts of such property that

had an original cost of $10 million and incurred $12

million for the cost of such replacements. On its Federal income tax returns before Year 1, X recognized

losses upon the dispositions of that $10 million of

property, capitalized $12 million for the cost of the

replacements of that property under § 263(a), and

deducted depreciation of $800,000 on such $12 million. X files a Form 3115 with its Federal income tax

return for Year 1 to change its methods of accounting to use the NGSH Method described in Rev. Proc.

2023-15.

(ii) Because Year 1 is X’s first taxable year ending after May 1, 2023, section 5.08(2)(a)(i) and (3)

(a) of Rev. Proc. 2023-15 apply. Pursuant to section

5.08(3)(a) of Rev. Proc. 2023-15, the per se capital

expenditure rules in section 5.05(1)(g) and (h) of

Rev. Proc. 2023-15 do not apply to the replacement

cost of $12 million that X capitalized under § 263(a)

on its Federal income tax returns before Year 1.

Accordingly, this $12 million cost of the replacements is not treated as a per se capital expenditure

1485

under the NGSH Method. Therefore, at the beginning of Year 1, X is treated under Rev. Proc. 202315 as owning natural gas distribution property at a

cost of $110 million ($120 million - $10 million).

Under section 5.08(2)(a)(i) of Rev. Proc. 2023-15, X

must make a late general asset account election on its

Form 3115 to include in general asset accounts all of

the $110 million of natural gas distribution property

that X owns at the beginning of Year 1. These general asset accounts also must include the total depreciation allowed or allowable before the beginning of

Year 1 for such property as the beginning balances

of the depreciation reserves. The late general asset

account election change is made on a modified cutoff method and, therefore, a § 481(a) adjustment is

neither required nor permitted for the late general

asset account election change.

(iii) On its Form 3115 to change to the NGSH

Method provided under Rev. Proc. 2023-15, the

net negative § 481(a) adjustment for this change is

$11,200,000 (deduction of $12 million for the cost

of the replacements before Year 1 less depreciation

of $800,000 for such replacement assets before Year

1) and is deducted in computing X’s taxable income

for Year 1.

(b) Example 2. (i) The facts are the same as in

Example 1, except that X files a Form 3115 with

its Federal income tax return for Year 2 to change

its method of accounting to use the NGSH Method

described in Rev. Proc. 2023-15, and, before Year

2, X deducted depreciation of $1,000,000 on the

replacement cost of $12 million.

(ii) Because X filed its method change in Year

2, the special rule under section 5.08(3)(a) of Rev.

Proc. 2023-15 does not apply to the replacement cost

of $12 million that X capitalized under § 263(a) on its

Federal income tax returns before Year 1. Accordingly, section 5.05(1)(g) and (h) of Rev. Proc. 202315 apply to the replacement cost of $12 million that

X capitalized on its Federal income tax returns before

Year 2. The total cost of $12 million for this replacement is a per se capital expenditure, and must be capitalized, under the NGSH Method.

(iii) At the beginning of Year 2, X is treated

under the NGSH Method as owning natural gas distribution property at a cost of $122 million ($120

million - $10 million + $12 million). Under section

5.08(2)(a)(i) of Rev. Proc. 2023-15, X must make a

late general asset account election on its Form 3115

to include in general asset accounts all of the $122

million of natural gas distribution property that

X owns at the beginning of Year 2. These general

asset accounts also must include the total depreciation allowed or allowable before the beginning of

Year 2 for such property as the beginning balances

of the depreciation reserves. The late general asset

account election change is made on a modified cutoff method and, therefore, a § 481(a) adjustment is

neither required nor permitted for the late general

asset account election.

(iv) On its Form 3115 to change to the NGSH

Method under Rev. Proc. 2023-15, the net § 481(a)

adjustment for this change is zero. Under its present

method of accounting and under the NGSH Method

(proposed method of accounting), X properly capitalized the $12 million for the cost of the replacements

before Year 1 and claimed depreciation for such

replacement assets before Year 2.

June 9, 2025

placed in service natural gas distribution property at a cost of $120 million before any dispositions or additions. Before Year 1, Y replaced

parts of such property that had an original cost of

$10 million and incurred $12 million for the cost

of such replacements. On its Federal income tax

returns before Year 1, Y recognized losses upon

the dispositions of that $10 million of property and

deducted $12 million for the cost of the replacements of such property under § 162(a). During

Year 1, Y replaced a part of the natural gas distribution property that had an original cost of $2

million and incurred $3 million for the cost of such

replacements. If Y had capitalized the $15 million

for the cost of the replacements, the total depreciation allowed or allowable for these assets would

have been $1 million before Year 2. On its Federal

income tax return for Year 1, Y recognized a loss

upon the disposition of that $2 million of property

and deducted $3 million for the cost of the replacements under § 162(a). Y files a Form 3115 with its

Federal income tax return for Year 2 to change its

method of accounting to use the NGSH Method

described in Rev. Proc. 2013-15.

(ii) Because Y filed its method change for Year 2,

section 5.08(2)(a)(i) of Rev. Proc. 2023-15 applies to

this change. However, the special rule under section

5.08(3)(a) of Rev. Proc. 2023-15 would apply only

if Y had filed its method change for Year 1. Accordingly, section 5.05(1)(g) and (h) of Rev. Proc. 202315 apply to the replacement cost of $12 million that

Y deducted under § 162(a) on its Federal income tax

returns before Year 1, and to the replacement cost

of $3 million that Y deducted under § 162(a) on its

Federal income tax return for Year 1. Therefore, the

total cost of $15 million for these replacements is a

per se capital expenditure, and must be capitalized,

under the NGSH Method.

(iii) At the beginning of Year 2, Y is treated under

Rev. Proc. 2023-15 as owning natural gas distribution property at a cost of $123 million ($120 million $10 million + $12 million - $2 million + $3 million).

Under section 5.08(2)(a)(i) of Rev. Proc. 2023-15, Y

must make a late general asset account election on its

Form 3115 to include in general asset accounts all of

the $123 million of natural gas distribution property

that Y owns at the beginning of Year 2. These general

asset accounts also must include the total depreciation allowed or allowable before the beginning of

Year 2 for such property as the beginning balances

of the depreciation reserves. The late general asset

account election change is made on a modified cutoff method and, therefore, a § 481(a) adjustment is

neither required nor permitted for the late general

asset account election.

(iv) On its Form 3115 to change to the NGSH

Method of Rev. Proc. 2023-15, the net positive

§ 481(a) adjustment for this change is $14 million

($15 million for the cost of the replacements before

Year 2 less depreciation allowed or allowable of $1

million for such replacement assets before Year 2)

and is taken into account in computing Y’s income

in the manner provided in section 3.12(4)(a) of this

revenue procedure.

(d) Example 4. (i) Z is a local natural gas distribution company. Before Year 4, Z owned and placed

June 9, 2025

in service natural gas distribution property at a cost

of $150 million before any dispositions or additions.

Before Year 4, Z replaced parts of such property that

had an original cost of $30 million and incurred $45

million for the cost of such replacements. On its Federal income tax returns before Year 4, Z recognized

losses upon the dispositions of that $30 million of

property, capitalized $45 million for the cost of the

replacements under § 263(a), and deducted depreciation of $15 million on such $45 million. Z files

a Form 3115 with its Federal income tax return for

Year 4 to change its method of accounting to use

the NGSH Method described in Rev. Proc. 2013-15.

Assume Z is eligible to file Form 3115 for Year 4

under the automatic change procedures in Rev. Proc.

2015-13.

(ii) At the beginning of Year 4, Z owns natural gas distribution property at a cost of $165

million ($150 million - $30 million + $45 million). Because Year 4 is Z’s fourth taxable year

ending after May 1, 2023, sections 5.08(2)(a)

(iii) and 5.08(3)(b) of Rev. Proc. 2023-15 apply.

Accordingly, under section 5.08(2)(a)(iii) of Rev.

Proc. 2023-15, Z must make a late general asset

account election on its Form 3115 to include in

general asset accounts all of the $165 million of

natural gas distribution property that Z owns at the

beginning of Year 4. These general asset accounts

also must include the total depreciation allowed or

allowable before the beginning of Year 4 for such

property as the beginning balances of the depreciation reserves. The late general asset account

election change is made using a modified cut-off

method and, therefore, a § 481(a) adjustment is

neither permitted nor required for the late general

asset account election.

(iii) Because sections 5.08(2)(a)(iii) and 5.08(3)

(b) of Rev. Proc. 2023-15 apply, Z’s change to the

NGSH Method described in Rev. Proc. 2023-15,

applies only to natural gas transmission and distribution property expenditures paid or incurred by Z

beginning in Year 4 and is made on a cut-off basis.

Therefore, a § 481(a) adjustment is neither required

nor permitted for the change to the NGSH Method

described in Rev. Proc. 2023-15.

(e) Example 5. (i) The facts are the same as

in Example 4, except that, on its Federal income

tax returns before Year 4, Z improperly deducted

$45 million for the cost of the replacements under

§ 162(a). Such $45 million of replacement costs

should have been capitalized under § 263(a). If Z

had capitalized the $45 million for the cost of the

replacements, the total depreciation allowed or

allowable for such assets would have been $15 million before Year 4.

(ii) Because Year 4 is Z’s fourth taxable year

ending after May 1, 2023, sections 5.08(2)(a)(iii) and

5.08(3)(b) of Rev. Proc. 2023-15 apply. Pursuant to

section 5.08(3)(b) of Rev. Proc. 2023-15, Z must also

change its method of accounting to capitalize under

§ 263(a) the $45 million for the cost of the replacements incurred before Year 4. The net positive

§ 481(a) adjustment for this coordinating change is

$30 million ($45 million for the cost of the replacements before Year 4 less depreciation allowed or

allowable of $15 million for such replacement assets

before Year 4). Z takes this net positive § 481(a)

adjustment of $30 million into account in computing

1486

Z’s taxable income in the manner provided in section

3 .12(4)(a) of this revenue procedure .

(iii) Z owns natural gas distribution property at

a cost of $165 million ($150 million - $30 million

+ $45 million) at the beginning of Year 4 . Accordingly, Z must make a late general asset account

election on its Form 3115 to include in general asset

accounts all of the $165 million of natural gas distribution property that Z owns at the beginning of Year

4 . These general asset accounts also must include the

total depreciation allowed or allowable before the

beginning of Year 4 for such property as the beginning balances of the depreciation reserves . The late

general asset account election change is made using

a modified cut-off method and, therefore, a § 481(a)

adjustment is neither permitted nor required for the

late general asset account election .

(iv) Because sections 5 .08(2)(a)(iii) and 5 .08(3)

(b) of Rev . Proc . 2023-15 apply, Z’s change to

the NGSH Method provided under sections 5 .02,

5 .03, 5 .04, 5 .06, and 5 .07 of Rev . Proc . 2023-15,

applies only to natural gas transmission and distribution property expenditures paid or incurred by Z

beginning in Year 4 and is made on a cut-off basis.

Therefore, a § 481(a) adjustment is neither required

nor permitted for the change to the NGSH Method

described in Rev . Proc . 2023-15 .

(v) Pursuant to section 3 .12(6)(c) and section

5 .08(3)(b) of Rev . Proc . 2023-15 the change to

capitalize the replacement costs of $45 million, the

late general asset account election change, and the

change to use the NGSH Method provided under

Rev . Proc . 2023-15 must be included on the same

Form 3115 filed by Z for Year 4 .

(8) Option to treat method changes

filed for Year 2 as filed for Year 1 for purposes of section 5.08(3)(a) of Rev. Proc.

2023-15 .

(a) In general . A taxpayer may choose

to treat a method change filed for the taxpayer’s second taxable year ending after

May 1, 2023 (Year 2), as filed for the

taxpayer’s first taxable year ending after

May 1, 2023 (Year 1), solely for purposes

of applying the special rule under section

5.08(3)(a) of Rev. Proc. 2023-15. Specifically, a taxpayer changing to the safe harbor method for linear property or for both

linear property and non-linear property, as

applicable, for the taxpayer’s second taxable year ending after May 1, 2023, with

a § 481(a) adjustment may choose not to

apply the per se capital expenditure rules

under section 5 .05(1)(g) and (h) of Rev .

Proc . 2023-15 to amounts paid or incurred

to replace or repair linear property or both

linear property and non-linear property, as

applicable, in taxable years ending on or

before May 1, 2023 . A taxpayer choosing

to treat a method change filed for Year 2 as

filed for Year 1 under this section 3.12(8)

must otherwise comply with all the provisions of Rev . Proc . 2023-15 .

Bulletin No. 2025–24

(b) Application. A taxpayer that

changed to the safe harbor method for

linear property or both linear property

and non-linear property, as applicable,

for Year 1, may not choose to treat a

method change filed for Year 2 as filed

for Year 1 under paragraph 3.12(8) of

this revenue procedure. Further, if a taxpayer chooses to treat a method change

filed for Year 2 as filed for Year 1 under

paragraph 3.12(8) of this revenue procedure, the taxpayer must do so for all

members of a consolidated group changing to the NGSH Method.

3.12(7)(a) through (e) of this revenue

procedure address taxpayers that do not

choose to treat a method change filed for

Year 2 as filed for Year 1 under this section

3.12(8). The following example illustrates

this section 3.12(8). The assumptions set

out in 3.12(7) of this revenue procedure

apply to this example.

(i) A is a local natural gas distribution company. Before Year 1, A owned and placed in service natural gas distribution property at a cost of

$120 million before any dispositions or additions.

Before Year 1, A replaced parts of such property

that had an aggregate original cost of $10 million

and incurred $12 million for the cost of the replacements. On its Federal income tax returns for taxable years before Year 1, A recognized losses upon

the disposition of that $10 million of property,

capitalized $12 million of the replacement costs of

such property under § 263(a), and deducted depreciation of $800,000 on the $12 million of replacement costs. During Year 1, A replaced a part of

the natural gas distribution property that had an

original cost of $2 million and incurred $3 million

for the cost of such replacements. On its Federal

income tax return for Year 1, A recognized a loss

upon the disposition of that $2 million of property,

capitalized $3 million for the cost of such replacements under § 263(a), and deducted depreciation of

$200,000 on the $3 million of replacement costs.

A files a Form 3115 with its Federal income tax

return for Year 2 to change its method of accounting to use the NGSH Method described in Rev.

Proc. 2023-15 and chooses to treat its method

change filed for Year 2 as filed for Year 1 under

section 3.12(8) of this revenue procedure. Accordingly, A does not apply the per se capitalization

rules of section 5.05(1)(g) and (h) of Rev. Proc.

2023-15 to amounts paid or incurred to replace or

repair linear property or both linear property and

non-linear property, as applicable, in taxable years

ending on or before May 1, 2023.

(ii) Because A chooses to treat its method

change filed for Year 2 as filed for Year 1 under

paragraph 3.12(8)(a) of this revenue procedure,

the special transition rule under section 5.08(3)(a)

applies to amounts paid or incurred by A to replace

or repair linear natural gas distribution or both linear property and non-linear property distribution

Bulletin No. 2025–24

property, as applicable, in taxable years ending

on or before May 1, 2023 . Accordingly, the per se

capital expenditure rules under section 5 .05(1)(g)

and (h) of Rev . Proc . 2023-15 do not apply to the

replacement cost of $12 million that A capitalized

under § 263(a) on its Federal income tax returns for

taxable years ending on or before May 1, 2023 . As

a result, the replacement cost of $12 million is not

required to be capitalized under the NGSH Method .

However, the per se capital expenditure rules under

section 5 .05(1)(g) and (h) of Rev . Proc . 2023-15

do apply to the replacement cost of $3 million that

A capitalized on its Federal income tax return for

Year 1 . The total cost of $3 million for this replacement is a per se capital expenditure and must be

capitalized under the NGSH Method .

(iii) Therefore, at the beginning of Year 2, A is

treated under Rev . Proc . 2023-15 as owning natural gas distribution property with an original cost

of $111 million ($120 million - $10 million - $2

million + $3 million) . Under section 5 .08(2)(a)(i)

of Rev . Proc . 2023-15, A must make a late general

asset account election on its Form 3115 to include

in general asset accounts all of the $111 million of

natural gas distribution property that A owns at the

beginning of Year 2 . These general asset accounts

also must include the total depreciation allowed or

allowable before the beginning of Year 2 for such

property as the beginning balances of the depreciation reserves . The late general asset account election

change is made on a modified cut-off method and,

therefore, a § 481(a) adjustment is neither required

nor permitted for the late general asset account election change .

(iv) On its Form 3115 to change to the NGSH

Method provided under Rev . Proc . 2023-15 for

Year 2, the net negative § 481(a) adjustment for

this change is $11,200,000 (deduction of $12 million for the cost of the replacements before Year 1

less depreciation of $800,000 for such replacement

assets before Year 1) . Because A property capitalized the $3 million for the cost of the replacements

in Year 1 as per se capital expenditures under

section 5 .05(1)(g) and (h) of Rev . Proc . 2023-15

and properly claimed depreciation in Year 1 for

such replacement assets, A does not include in its

§ 481(a) adjustment any amounts related to the cost

of replacements in Year 1 . Accordingly, A deducts

$11,200,000 in computing A’s taxable income for

Year 2 .

(9) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change to the methods of

accounting under this section 3 .12 is

“269 .”

(10) Contact information . For further

information regarding a change under this

section, contact Riston Escher at (202)

317-5100 (not a toll-free number) .

SECTION 4 . BAD DEBTS (§ 166)

.01 Change from reserve method to

specific charge-off method .

1487

(1) Description of change . This change

applies to a taxpayer (other than a bank

as defined in § 585(a)(2)) that wants to

change its method of accounting for bad

debts from a reserve method (or other

improper method) to a specific charge-off

method that complies with § 166 . For procedures applicable to banks, see § 585(c)

and the regulations thereunder and section

25 of this revenue procedure .

(2) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change under this section

4 .01 is “5 .”

(3) Contact information . For further

information regarding a change under

this section, contact Benjamin Masselli at

(202) 317-7003 (not a toll-free number) .

.02 Conformity election by bank after

previous election automatically revoked .

(1) Description of change . This change

applies to a bank that wants to change

its method of accounting for bad debts

by making the conformity election under

§ 1 .166-2(d)(3)(iii)(C)(3) .

(2) Applicability . This change

only applies to a bank (as defined in

§ 1 .166-2(d)(4)(i)) that:

(a) is subject to supervision by Federal

authorities, or by state authorities maintaining substantially equivalent standards;

(b) has previously adopted or elected

to change to the method of accounting for

bad debts described in § 1 .166-2(d)(3);

(iv)(C);

(d) meets the express determination

requirement of § 1 .166-2(d)(3)(iii)(D) for

the year of change; and

(e) now seeks the consent of the Commissioner to make an election under

§ 1 .166-2(d)(3)(iii)(C)(3) .

(3) Certain eligibility rule inapplicable . The eligibility rule in section 5 .01(1)

(f) of Rev . Proc . 2015-13, 2015-5 I .R .B .

419, does not apply to this change .

(4) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change under this section

4 .02 is “211 .”

(5) Contact information . For further

information regarding a change under this

section, contact K . Scott Brown at (202)

317-4423 (not a toll-free number) .

June 9, 2025

.03 Change to the allowance chargeoff method.

(1) Description of change.

(a) Applicability. This change applies

to a regulated financial company (as

defined in proposed § 1.166-2(d)(4)(ii)) or

a member of a regulated financial group

(as defined in proposed § 1.166-2(d)(4)

(iii)) that wants to change its method of

accounting to the Allowance Charge-off

Method described in proposed § 1.1662(d)(1). See Bad Debt Deductions for

Regulated Financial Companies and

Members of Regulated Financial Groups,

88 FR 89636 (Dec. 28, 2023).

(b) Inapplicability. This change

does not apply to a bank (as defined in

§ 581) that wants to change its method

of accounting for bad debts from the

§ 585 reserve method to the Allowance

Charge-off Method described in proposed § 1.166-2(d)(1). Any change to the

Allowance Charge-off Method requested

by such a bank must be made under the

non-automatic change procedures in Rev.

Proc. 2015-13.

(2) Certain eligibility rule inapplicable. The eligibility rule in section 5.01(1)

(f) of Rev. Proc. 2015-13 does not apply

to a change described in section 4.03(1)(a)

of this revenue procedure for the taxpayer’s first or second taxable year ending on

or after December 28, 2023.

(3) Manner of making change.

(a) Charge-offs on or after beginning of

the year of change. This change is made on

a cut-off basis and only applies to chargeoffs (as defined in proposed § 1.166-2(d)

(4)(i)) made by a regulated financial company or a member of a regulated financial

group on its applicable financial statement

(as defined in proposed § 1.166-2(d)(4)

(viii)) that occur on or after the beginning of the year of change. Accordingly,

a § 481(a) adjustment is neither permitted

nor required.

(b) Charge-offs prior to the year of

change. Any charge-offs that occurred

prior to the year of change are accounted

for under the taxpayer’s former method

of accounting, and any charge-offs that

occur in the year of change and in subsequent taxable years are accounted for

under the taxpayer’s method of accounting for which consent is granted. In no

event may a taxpayer take a deduction

under its new method of accounting for

June 9, 2025

any amount of debt previously deducted

as worthless under its former method of

accounting.

(4) Revocation of conformity election

under existing § 1.166-2(d)(3). A regulated financial company or a member of

a regulated financial group that previously made a conformity election under

§ 1.166-2(d)(3) and that changes its

method of accounting under this section

4.03 is treated as having revoked its conformity election pursuant to § 1.166-2(d)

(3)(iv).

(5) Contact information. For further

information regarding a change under this

section, contact Jason Kristall at (202)

317-6945 (not a toll-free number).

(6) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

4.03 is “272.”

SECTION 5. INTEREST EXPENSE

(§163) AND AMORTIZABLE BOND

PREMIUM (§ 171)

.01 Revocation of § 171(c) election.

(1) Description of change. This change

applies to a taxpayer that wants to change

its method of accounting for amortizable

bond premium by revoking its § 171(c)

election. Under § 171(c), a taxpayer that

holds certain taxable bonds may elect to

amortize any bond premium on the bonds

in accordance with regulations prescribed

by the Secretary. Sections 1.171-1 through

1.171-5 provide rules relating to the amortization of bond premium by a taxpayer.

Section 1.171-4 provides the procedures

to make a § 171(c) election to amortize

bond premium.

(2) Revocation of election. The revocation of a § 171(c) election applies to all

taxable bonds that are held by the taxpayer

on the first day of the first taxable year for

which the revocation is effective (year of

change), and to all taxable bonds that are

subsequently acquired by the taxpayer.

(3) Manner of making change. This

change is made using a cut-off basis and

applies only to taxable bonds held on or

after the beginning of the year of change.

Accordingly, a § 481(a) adjustment is neither permitted nor required.

Under the cut-off basis, for taxable

bonds held at the beginning of the year

1488

of change, the taxpayer may not amortize any remaining bond premium on the

bonds. Because the cut-off basis is prescribed for this change, the basis of any

bond, adjusted for amounts previously

amortized during the period of the election, is not affected by the revocation.

(4) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

5.01 is “16.”

(5) Additional requirements. On a

statement attached to the Form 3115, the

taxpayer must provide:

(a) the reason(s) for revoking the election; and

(b) a description of the method by

which, and the date on which, the taxpayer made the § 171(c) election that is

proposed to be revoked.

(6) Audit protection. Any audit protection applicable to this change under

section 8 of Rev. Proc. 2015-13, 2015-5

I.R.B. 419, does not preclude the Commissioner from examining the method

used by the taxpayer to determine the

amount of amortizable bond premium

under § 171(b) for a taxable year prior to

the year of change.

(7) Contact information. For further

information regarding a change under this

section, contact Steven Harrison at (202)

317-6842 (not a toll-free number).

.02 Change to comply with § 163(e)(3).

(1) Description of change. This

change applies to a taxpayer that wants

to change its method or methods of

accounting to comply with the requirements of § 163(e)(3), which defers certain deductions attributable to original

issue discount debt instruments held

by related foreign persons. Any portion

of the original issue discount will not be

allowable as a deduction to the U.S. person issuer until paid.

(2) Accelerated § 481(a) adjustment

period in certain situations. In addition

to the circumstances set forth in section

7.03(4) of Rev. Proc. 2015-13, 2015-5

I.R.B. 419, the § 481 adjustment period

provided in section 7.03 of Rev. Proc.

2015-13 will be accelerated for a U.S. person with a remaining balance of a § 481(a)

adjustment that arose by reason of a

change in method of accounting described

in this section 5.02 if a debt instrument

Bulletin No. 2025–24

subject to the change is paid off, retired,

or significantly modified within the meaning of § 1.1001-3 prior to the end of the

§ 481(a) adjustment period. The portion

of the remaining § 481(a) adjustment

attributable to the debt instrument must

be taken into account in the taxable year

the debt instrument is paid off, retired, or

significantly modified within the meaning

of § 1.1001-3.

(3) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

5.02 is “212.”

(4) Contact information. For further

information regarding a change under this

section, contact Dylan Steiner at (202)

317-6934 (not a toll-free number).

SECTION 6. DEPRECIATION OR

AMORTIZATION (§§ 56(a)(1),

167, 168, 197, 280F(a), or 1502, OR

FORMER §§ 56(g)(4)(A), 168, 1400I,

1400L, or 1400N(d))

.01 Impermissible to permissible

method of accounting for depreciation or

amortization.

(1) Description of change.

(a) Applicability. This change applies

to a taxpayer that wants to change from an

impermissible to a permissible method of

accounting for depreciation or amortization (depreciation) for any item of depreciable or amortizable property under the

taxpayer’s present or proposed method of

accounting:

(i) for which the taxpayer used the

impermissible method of accounting in at

least two taxable years immediately preceding the year of change (but see section

6.01(1)(b) of this revenue procedure for

property placed in service in the taxable

year immediately preceding the year of

change);

(ii) for which the taxpayer is making

a change in method of accounting under

§ 1.446-1(e)(2)(ii)(d);

(iii) for which depreciation is determined under § 56(a)(1), § 56(g)(4)(A)

(as in effect on the day before the date

of enactment of Public Law 115-97, 131

Stat. 2054 (Dec. 22, 2017), commonly

referred to as the Tax Cuts and Jobs Act

(TCJA)), § 167, § 168, § 197, § 1400I,

or § 1400L(c), under § 168 prior to its

Bulletin No. 2025–24

amendment in 1986 (former § 168), or

under any additional first year depreciation deduction provision of the Code (for

example, § 168(k), § 168(l), § 1400L(b),

or § 1400N(d)); and

(iv) that is owned by the taxpayer at

the beginning of the year of change (but

see section 6.07 of this revenue procedure

for property disposed of before the year of

change).

(b) Taxpayer has not adopted a

method of accounting for the item of

property. If a taxpayer does not satisfy

section 6.01(1)(a)(i) of this revenue

procedure for an item of depreciable or

amortizable property because this item

of property is placed in service by the

taxpayer in the taxable year immediately

preceding the year of change (“1-year

depreciable property”), the taxpayer may

change from the impermissible method of

determining depreciation to the permissible method of determining depreciation

for the 1-year depreciable property by

filing a Form 3115 for this change, provided the § 481(a) adjustment reported

on the Form 3115 includes the amount of

any adjustment that is attributable to all

property (including the 1-year depreciable property) subject to the Form 3115.

Alternatively, the taxpayer may change

from the impermissible method of determining depreciation to the permissible

method of determining depreciation for a

1-year depreciable property by filing an

amended federal income tax return, or an

administrative adjustment request under

§ 6227 (AAR), as applicable, for the

property’s placed-in-service year prior

to the date the taxpayer files its federal

income tax return for the taxable year

succeeding the placed-in-service year.

not apply to:

(i) any property to which § 1016(a)(3)

(regarding property held by a tax-exempt

organization) applies;

(ii) a taxpayer that is required under

§ 263A and the regulations thereunder to

capitalize the costs with respect to which

the taxpayer wants to change its method

of accounting under this section 6.01 if

the taxpayer is not capitalizing these costs,

unless the taxpayer concurrently changes

its method to capitalize these costs in

conjunction with a change to a UNICAP

method under section 12.01, 12.02, 12.08,

1489

or 12.12 of this revenue procedure (as

applicable);

(iii) any property for which a taxpayer

is making a change in depreciation under

§ 1.446-1(e)(2)(ii)(d)(2)(vi) or (vii);

(iv) any property subject to § 167(g)

regarding property depreciated under the

income forecast method;

(v) any § 1250 property that a taxpayer

is reclassifying to an asset class of Rev.

Proc. 87-56, 1987-2 C.B. 674 (as clarified and modified by Rev. Proc. 88-22,

1988-1 C.B. 785), or Rev. Proc. 83-35,

1983-1 C.B. 745, as appropriate, that does

not explicitly include § 1250 property (for

example, asset class 57.0, Distributive

Trades and Services);

(vi) any property for which a taxpayer is revoking a timely valid election,

or making a late election, under § 167,

§ 168, § 179, § 1400I, § 1400L(c), former § 168, § 13261(g)(2) or (3) of the

Revenue Reconciliation Act of 1993

(1993 Act), 1993-3 C.B. 1, 128 (relating to amortizable § 197 intangibles),

or any additional first year depreciation

deduction provision of the Code (for

example, § 168(k), § 168(l), § 1400L(b),

or § 1400N(d)). A taxpayer may request

consent to revoke or make the election

by submitting a request for a letter ruling

under Rev. Proc. 2025-1, 2025-1 I.R.B.

1 (or successor). However, if a taxpayer

is revoking or making an election under

§ 179, see § 179(c) and § 1.179-5. See

§ 1.446-1(e)(2)(ii)(d)(3)(iii);

(vii) any property for which depreciation is determined under § 56(g)(4)(A)

(as in effect on the day before the date of

enactment of the TCJA) or § 167 (other

than under § 168, § 1400I, § 1400L(c),

former § 168, or any additional first year

depreciation deduction provision of the

Code (for example, § 168(k), § 168(l),

§ 1400L(b), or § 1400N(d)) and a taxpayer is changing the useful life of the

property. A change in the useful life of

property is corrected by adjustments

in the applicable taxable year provided

under § 1.446-1(e)(2)(ii)(d)(5)(iv). However, this section 6.01(1)(c)(vii) does

not apply if the taxpayer is changing to

or from a useful life, recovery period,

or amortization period that is specifically assigned by the Code (for example,

§ 167(f)(1), § 168(c)), the regulations

thereunder, or other guidance published

June 9, 2025

in the Internal Revenue Bulletin and,

therefore, this change is a change in

method of accounting (unless section

6.01(1)(c)(xv) of this revenue procedure

applies). See § 1.446-1(e)(2)(ii)(d)(3)(i);

(viii) any depreciable property for

which the use changes in the hands of the

same taxpayer. See § 1.446-1(e)(2)(ii)(d)

(3)(ii). But see sections 6.04 and 6.05 of

this revenue procedure for changing to

the methods of accounting provided in

§ 1.168(i)-1(c)(2)(ii)(I) or § 1.168(i)-1(h)

(2), and § 1.168(i)-4, respectively;

(ix) any property for which depreciation is determined in accordance

with § 1.167(a)-11 (regarding the Class

Life Asset Depreciation Range System

(ADR));

(x) any change in method of accounting involving a change from deducting the

cost or other basis of any property as an

expense to capitalizing and depreciating

the cost or other basis, or vice versa (but

see section 11.08 of this revenue procedure for making such a change in method

of accounting under the final tangible

property regulations);

(xi) any change in method of accounting involving a change from one permissible method of accounting for the property

to another permissible method of accounting for the property. For example:

(A) a change from the straight-line

method of depreciation to the income

forecast method of depreciating for videocassettes. See Rev. Rul. 89-62, 1989-1

C.B. 78; or

(B) a change from charging the depreciation reserve with costs of removal

and crediting the depreciation reserve

with salvage proceeds to deducting costs

of removal as an expense (provided the

costs of removal are not required to be

capitalized under any provision of the

Code, such as § 263(a)) and including

salvage proceeds in taxable income (see

section 6.02 of this revenue procedure

for making this change for property for

which depreciation is determined under

§ 167);

(xii) any change in method of accounting involving both a change from treating

the cost or other basis of the property as

nondepreciable or nonamortizable property to treating the cost or other basis

of the property as depreciable or amortizable property and the adoption of a

June 9, 2025

method of accounting for depreciation

requiring an election under § 167, § 168,

§ 1400I, § 1400L(c), former § 168,

§ 13261(g)(2) or (3) of the 1993 Act,

or any additional first year depreciation

deduction provision of the Code (for

example, § 168(k), § 168(l), § 1400L(b),

or § 1400N(d)) (for example, a change in

the treatment of the space consumed in

landfills placed in service in 2006 from

nondepreciable to depreciable property

(assuming section 6.01(1)(c)(xiii) of this

revenue procedure does not apply) and

the making of an election under § 168(f)

(1) to depreciate this property under the

unit-of-production method of depreciation under § 167);

(xiii) any change in method of accounting for any item of income or deduction

other than depreciation, even if the change

results in a change in computing depreciation under § 1.446-1(e)(2)(ii)(d)(2)(i),

(ii), (iii), (iv), (v), (vi), (vii), or (viii). For

example, a change in method of accounting involving:

(A) a change in inventory costs (for

example, when property is reclassified

from inventory property to depreciable

property, or vice versa) (but see section

11.02 of this revenue procedure for making a change in method of accounting

from inventory property to depreciable

property for unrecoverable line pack gas

or unrecoverable cushion gas, and section 11.06 of this revenue procedure for

making a change in method of accounting

from inventory property to depreciable

property for rotable spare parts); or

(B) a change in the character of a transaction from sale to lease, or vice versa (but

see section 6.03 of this revenue procedure

for making this change);

(xiv) a change from determining

depreciation under § 168 to determining

depreciation under former § 168 for any

property subject to the transition rules in

§ 203(b) or § 204(a) of the Tax Reform

Act of 1986, 1986-3 (Vol. 1) C.B. 1,

60-80;

(xv) any change in the placed-in-service date of a depreciable or amortizable

property. This change is corrected by

adjustments in the applicable taxable year

provided under § 1.446-1(e)(2)(ii)(d)(5)

(v);

(xvi) any property for which the taxpayer has claimed a federal income tax

1490

credit (e.g., the rehabilitation credit under

§ 47), unless the change does not alter the

amount of the federal income tax credit;

(xvii) any qualified improvement property, as defined in § 168(e)(6), placed in

service by the taxpayer after December

31, 2017, to which section 6.18 of this

revenue procedure applies;

(xviii) any property to which section

4 or 5 of Rev. Proc. 2020-22, 2020-18

I.R.B. 745, applies. (See sections 4.02

and 4.03, or 5.02 of Rev. Proc. 2020-22,

as applicable, for making any changes to

depreciation for such property.);

(xix) any change in method of accounting to which section 6.20 of this revenue

procedure applies; or

(xx) the change in method of accounting specified in section 6.21 of this revenue procedure.

(2) Certain eligibility rules inapplicable. The eligibility rule in section 5.01(1)

(d) of Rev. Proc. 2015-13, 2015-5 I.R.B.

419, does not apply to this change. If

during any of the five taxable years ending with the year of change, a taxpayer

requested or made a change in method of

accounting from expensing to capitalizing, or vice versa, the cost or other basis

of an asset, the eligibility rule in section

5.01(1)(f) of Rev. Proc. 2015-13 is not

applicable to a change under this section

6.01 for that same asset.

(3) Additional requirements. A taxpayer also must comply with the following:

(a) Permissible method of accounting

for depreciation. A taxpayer must change

to a permissible method of accounting

for depreciation for the item of depreciable or amortizable property. The permissible method of accounting is the same

method that determines the depreciation

allowable for the item of property (as

provided in section 6.01(7) of this revenue procedure).

(b) Statements required. A taxpayer

(including a qualified small taxpayer as

defined in section 6.01(4)(b) of this revenue procedure) must provide the following statements, if applicable, and attach

them to the completed Form 3115:

(i) a detailed description of the present

and proposed methods of accounting. A

general description of these methods of

accounting is unacceptable (for example,

MACRS to MACRS, erroneous method

Bulletin No. 2025–24

to proper method, claiming less than the

depreciation allowable to claiming the

depreciation allowable);

(ii) to the extent not provided elsewhere on the Form 3115, a statement

describing the taxpayer’s business or

income-producing activities. Also, if the

taxpayer has more than one business or

income-producing activity, a statement

describing the taxpayer’s business or

income-producing activity in which the

item of property at issue is primarily used

by the taxpayer;

(iii) to the extent not provided elsewhere on the Form 3115, a statement of

the facts and law supporting the proposed

method of accounting, new classification

of the item of property, and new asset

class in, as appropriate, Rev. Proc. 87-56

or Rev. Proc. 83-35. If the taxpayer is the

owner and lessor of the item of property

at issue, the statement of the facts and law

supporting the new asset class also must

describe the business or income-producing activity in which that item of property is primarily used by the lessee;

(iv) to the extent not provided elsewhere on the Form 3115, a statement

identifying the year in which the item of

property was placed in service by the taxpayer;

(v) if any item of property is public

utility property within the meaning of

§ 168(i)(10) or former § 167(l)(3)(A),

as applicable, a statement providing that

the taxpayer agrees to the following additional terms and conditions:

(A) a normalization method of accounting (within the meaning of former § 167(l)

(3)(G), former § 168(e)(3)(B), or § 168(i)

(9), as applicable) will be used for the

public utility property subject to the Form

3115;

(B) as of the beginning of the year

of change, the taxpayer will adjust its

deferred tax reserve account or similar

reserve account in the taxpayer’s regulatory books of account by the amount of

the deferral of federal income tax liability

associated with the § 481(a) adjustment

applicable to the public utility property

subject to the Form 3115; and

the federal income tax return for the year

of change, the taxpayer will provide a

copy of the completed Form 3115 to any

regulatory body having jurisdiction over

Bulletin No. 2025–24

the public utility property subject to the

Form 3115;

(vi) if the taxpayer is changing the classification of an item of § 1250 property

placed in service after August 19, 1996, to

a retail motor fuels outlet under § 168(e)

(3)(E)(iii), a statement containing the following representation: “For purposes of

§ 168(e)(3)(E)(iii) of the Internal Revenue

Code, the taxpayer represents that (A) 50

percent or more of the gross revenue generated from the item of § 1250 property is

from the sale of petroleum products (not

including gross revenue from related services, such as the labor cost of oil changes

and gross revenue from the sale of nonpetroleum products such as tires and oil

filters), (B) 50 percent or more of the floor

space in the item of property is devoted

to the sale of petroleum products (not

including floor space devoted to related

services, such as oil changes and floor

space devoted to nonpetroleum products

such as tires and oil filters), or (C) the item

of § 1250 property is 1,400 square feet or

less.”; and

(vii) if the taxpayer is changing the

classification of an item of property from

§ 1250 property to § 1245 property under

§ 168 or former § 168, a statement of the

facts and law supporting the new § 1245

property classification, and a statement

containing the following representation:

“Each item of depreciable property that is

the subject of the Form 3115 filed under

section 6.01 of Rev. Proc. 2025-23 for

the year of change beginning [Insert the

date], and that is reclassified from [Insert,

as appropriate: nonresidential real property, residential rental property, qualified

leasehold improvement property, qualified restaurant property, qualified retail

improvement property, qualified improvement property as defined in § 168(e)(6)

(as amended by § 13204 of the TCJA),

19-year real property, 18-year real property, or 15-year real property] to an asset

class of [Insert, as appropriate, either:

Rev. Proc. 87-56, 1987-2 C.B. 674, or

Rev. Proc. 83-35, 1983-1 C.B. 745] that

does not explicitly include § 1250 property, is § 1245 property for depreciation

purposes.”

(4) Reduced filing requirement for

qualified small taxpayers.

(a) In general. A qualified small taxpayer, as defined in section 6.01(4)(b)

1491

of this revenue procedure, is required to

complete only the following information

on Form 3115 (Rev. December 2022) to

make this change:

(i) The identification section of page 1

(above Part I);

(ii) The signature section at the bottom

of page 1;

(iii) Part I;

(iv) Part II, all lines except lines 13,

15b, 16c, 17, and 19;

(v) Part IV, all lines except line 25; and

(vi) Schedule E.

(b) Definition of qualified small taxpayer. A “qualified small taxpayer”

is a taxpayer whose average annual

gross receipts, as determined under

§ 1.263(a)-3(h)(3), for the three preceding taxable years is less than or equal to

$10,000,000.

(5) Section 481(a) adjustment.

Because the adjusted basis of the property is changed as a result of a method

change made under this section 6.01 (see

section 6.01(6) of this revenue procedure), items are duplicated or omitted.

Accordingly, this change is made with

a § 481(a) adjustment. This adjustment

may result in either a negative § 481(a)

adjustment (a decrease in taxable

income) or a positive § 481(a) adjustment (an increase in taxable income)

and may be a different amount for regular tax, alternative minimum tax, and

adjusted current earnings purposes. This

§ 481(a) adjustment equals the difference

between the total amount of depreciation

taken into account in computing taxable

income for the property under the taxpayer’s present method of accounting

(including the amount attributable to any

property described in section 6.01(1)(b)

of this revenue procedure that is included

in the taxpayer’s Form 3115), and the

total amount of depreciation allowable

for the property under the taxpayer’s proposed method of accounting (as determined under section 6.01(7) of this revenue procedure, and including the amount

attributable to any property described in

section 6.01(1)(b) of this revenue procedure that is included in the taxpayer’s

Form 3115), for open and closed years

prior to the year of change. However, the

amount of the § 481(a) adjustment must

be adjusted to account for the proper

amount of the depreciation allowable

June 9, 2025

that is required to be capitalized under

any provision of the Code (for example,

§ 263A) at the beginning of the year of

change .

(6) Basis adjustment . As of the beginning of the year of change, the basis of

depreciable property to which this section

6.01 applies must reflect the reductions

required by § 1016(a)(2) for the depreciation allowable for the property (as determined under section 6 .01(7) of this revenue procedure) .

(7) Meaning of depreciation allowable .

(a) In general . Section 6 .01(7) of this

revenue procedure provides the amount

of the depreciation allowable determined

under § 56(a)(1), § 56(g)(4)(A) (as in

effect on the day before the date of enactment of the TCJA), § 167, § 168, or § 197,

or former § 168, § 1400I, or § 1400L(c) .

This amount, however, may be limited by

other provisions of the Code (for example,

§ 280F) .

(b) Section 56(a)(1) property . The

depreciation allowable for any taxable

year for property for which depreciation is

determined under § 56(a)(1) is determined

by using the depreciation method, recovery period, and convention provided for

under § 56(a)(1) that applies for the property’s placed-in-service date .

depreciation allowable for any taxable

year for property for which depreciation

is determined under § 56(g)(4)(A) (as in

effect on the day before the date of enactment of the TCJA) is determined by using

the depreciation method, recovery period

or useful life, as applicable, and convention provided for under § 56(g)(4)(A)

(as in effect on the day before the date of

enactment of the TCJA) that applies for

the property’s placed-in-service date .

(d) Section 167 property . Generally,

for any taxable year, the depreciation

allowable for property for which depreciation is determined under § 167, is determined either:

(i) under the depreciation method

adopted by the taxpayer for the property;

(ii) if that depreciation method does not

result in a reasonable allowance for depreciation or the taxpayer has not adopted

a depreciation method for the property, under the straight-line depreciation

method .

June 9, 2025

For determining the estimated useful

life and salvage value of the property, see

§ 1 .167(a)-1(b) and (c), respectively .

The depreciation allowable for any

taxable year for property subject to

§ 167(f) (regarding certain property

excluded from § 197) is determined by

using the depreciation method and useful

life prescribed in § 167(f) . If computer

software is depreciated under § 167(f)

(1) and is qualified property (as defined

in § 168(k)(2) as amended by the TCJA

and § 1.168(k)-2), qualified property (as

defined in § 168(k)(2) as in effect on

the day before the date of enactment of

the TCJA and § 1 .168(k)-1), 50-percent

bonus depreciation property (as defined

in § 168(k)(4) (as in effect on the day

before the date of enactment of the Economic Stimulus Act of 2008, Pub . L .

No . 110-185, 122 Stat . 613 (February

13, 2008)) and § 1.168(k)-1), qualified

disaster assistance property (as defined in

§ 168(n)(2) (as in effect on the day before

the date of enactment of the Tax Technical Corrections Act of 2018, Pub . L .

No . 115-141, Division U, 132 Stat . 1211

(March 23, 2018)), qualified New York

Liberty Zone (Liberty Zone) property

(as defined in § 1400L(b)(2) (as in effect

on the day before the date of enactment

of the Tax Technical Corrections Act

of 2018) and § 1.1400L(b)-1), qualified

Gulf Opportunity Zone (GO Zone) property (as defined in § 1400N(d)(2) (as in

effect on the day before the date of enactment of the Tax Technical Corrections

Act of 2018) and sections 2 .02 and 2 .03

of Notice 2006-77, 2006-2 C .B . 590,

as clarified, modified, and amplified by

Notice 2007-36, 2007-1 C .B . 1000), specified Gulf Opportunity Zone extension

property (GO Zone extension property)

(as defined in § 1400N(d)(6) (as in effect

on the day before the date of enactment

of the Tax Technical Corrections Act of

2018) and section 4 of Notice 2007-36),

or qualified Recovery Assistance (RA)

property (as defined in sections 2.02 and

2 .03 of Notice 2008-67, 2008-32 I .R .B .

307), the depreciation allowable for that

computer software under § 167(f)(1) is

also determined by taking into account

the additional first year depreciation

deduction provided by § 168(k), § 168(n)

(as in effect on the day before the date

of enactment of the Tax Technical Cor-

1492

rections Act of 2018), § 1400L(b) (as in

effect on the day before the date of enactment of the Tax Technical Corrections

Act of 2018), or § 1400N(d) (as in effect

on the day before the date of enactment

of the Tax Technical Corrections Act of

2018), or by § 15345(a)(1) and (d)(1)

of the Food, Conservation, and Energy

Act of 2008, Pub . L . No . 110-246, 122

Stat . 1651 (June 18, 2008), as applicable,

unless the taxpayer made a timely valid

election not to deduct any additional first

year depreciation for the computer software .

(e) Section 168 property . The depreciation allowable for any taxable year for

property for which depreciation is determined under § 168, is determined as follows:

(i) by using either:

(A) the general depreciation system in

§ 168(a); or

(B) the alternative depreciation

system in § 168(g) if the property is

required to be depreciated under the

alternative depreciation system pursuant

to § 168(g)(1) or other provisions of the

Code (for example, property described in

§ 263A(e)(2)(A) or § 280F(b)(1)) . Property required to be depreciated under the

alternative depreciation system pursuant to § 168(g)(1) includes property in

a class (as set out in § 168(e)) for which

the taxpayer made a timely valid election

under § 168(g)(7);

(ii) if the property is qualified property,

50-percent bonus depreciation property,

qualified disaster assistance property,

Liberty Zone property, GO Zone property, GO Zone extension property, or RA

property, by also taking into account the

additional first year depreciation deduction provided by § 168(k), § 168(n) (as

in effect on the day before the date of

enactment of the Tax Technical Corrections Act of 2018), § 1400L(b) (as in

effect on the day before the date of enactment of the Tax Technical Corrections

Act of 2018), or § 1400N(d) (as in effect

on the day before the date of enactment

of the Tax Technical Corrections Act of

2018), or by § 15345(a)(1) and (d)(1) of

the Food, Conservation, and Energy Act

of 2008, as applicable, unless the taxpayer

made a timely valid election not to deduct

the additional first year depreciation (or

made a deemed election not to deduct

Bulletin No. 2025–24

the additional first year depreciation; for

further guidance, see, for example, Rev .

Proc . 2002-33, 2002-1 C .B . 963, Rev .

Proc . 2003-50, 2003-2 C .B . 119, Notice

2006-77, Notice 2008-67, section 5 of

Rev . Proc . 2011-26, 2011-16 I .R .B . 664,

Rev . Proc . 2015-48, 2015-40 I .R .B . 469,

or Rev . Proc . 2019-33, 2019-34 I .R .B .

662) for the class of property (as defined

in § 1 .168(k)-2(f)(1)(ii), § 1 .168(k)-1(e)

(2), § 1 .1400L(b)-1(e)(2), or section 4 .02

of Notice 2006-77, as applicable) in which

that property is included;

(iii) if the property is qualified second generation biofuel plant property (as

defined in § 168(l)(2) and (3)) or qualified cellulosic biofuel plant property (as

defined in former § 168(l)(2) and (3)),

by also taking into account the additional

first year depreciation deduction provided

by § 168(l)(1), unless the taxpayer made

a timely valid election not to deduct the

additional first year depreciation for the

property; and

(iv) if the property is qualified reuse and

recycling property (as defined in § 168(m)

(2)), by also taking into account the additional first year depreciation deduction

provided by § 168(m)(1), unless the taxpayer made a timely valid election not to

deduct the additional first year depreciation for the property .

(f) Section 197 property . The amortization allowable for any taxable year for

an amortizable § 197 intangible (including

any property for which a timely election

under § 13261(g)(2) of the 1993 Act was

made) is determined in accordance with

§ 1 .197-2(f) .

(g) Former § 168 property . The depreciation allowable for any taxable year for

property subject to former § 168 is determined by using either:

(i) the accelerated method of cost

recovery applicable to the property (for

example, for 5-year property, the recovery

method under former § 168(b)(1)); or

(ii) the straight-line method applicable

to the property if the property is required

to be depreciated under the straight-line

method (for example, property described

in former § 168(f)(2) or former § 280F(b)

(2)) or if the taxpayer elected to determine the depreciation allowance under

the optional straight-line percentage (for

example, the straight-line method in former § 168(b)(3)) .

Bulletin No. 2025–24

(h) Qualified revitalization building .

The depreciation allowable for any taxable year for any qualified revitalization

building (as defined in § 1400I(b)(1) (as in

effect on the day before the date of enactment of the Tax Technical Corrections Act

of 2018)) for which the taxpayer has made

a timely valid election under § 1400I(a) is

determined as follows:

(i) if the taxpayer elected to deduct

one-half of any qualified revitalization

expenditures (as defined in § 1400I(b)(2)

and as limited by § 1400I(c) (as in effect

on the day before the date of enactment

of the Tax Technical Corrections Act of

2018)) chargeable to a capital account

with respect to the qualified revitalization

building for the taxable year in which the

building is placed in service by the taxpayer, the depreciation allowable for the

qualified revitalization building’s placedin-service year is equal to one-half of the

qualified revitalization expenditures for

the building and the depreciation allowable for the remaining depreciable basis

of the qualified revitalization building for

its placed-in-service year and subsequent

taxable years is determined using the

general depreciation system of § 168(a)

or the alternative depreciation system of

§ 168(g), as applicable; or

(ii) if the taxpayer elected to amortize

all of the qualified revitalization expenditures chargeable to a capital account

with respect to the qualified revitalization building ratably over the 120-month

period beginning with the month in which

the building is placed in service, the

depreciation allowable for the qualified

revitalization expenditures is determined

in accordance with this election and the

depreciation allowable for the remaining

depreciable basis of the qualified revitalization building is determined using the

general depreciation system of § 168(a)

or the alternative depreciation system of

§ 168(g), as applicable .

(i) Qualified New York Liberty Zone

leasehold improvement property . The

depreciation allowable for any taxable

year for qualified New York Liberty

Zone leasehold improvement property (as

defined in § 1400L(c)(2) (as in effect on

the day before the date of enactment of the

Tax Technical Corrections Act of 2018))

is determined by using the depreciation

method and recovery period prescribed in

1493

§ 1400L(c) (as in effect on the day before

the date of enactment of the Tax Technical

Corrections Act of 2018) unless the taxpayer made a timely valid election under

§ 1400L(c)(5) (as in effect on the day

before the date of enactment of the Tax

Technical Corrections Act of 2018) not to

use that recovery period .

(8) Concurrent automatic change .

(a) A taxpayer making this change for

more than one asset for the same year of

change should file a single Form 3115 for

all such assets and provide a single net

§ 481(a) adjustment for all the changes

included in that Form 3115 . If one or

more of the changes in that single Form

3115 generate a negative § 481(a) adjustment and other changes in that same

Form 3115 generate a positive § 481(a)

adjustment, the taxpayer may provide a

single negative § 481(a) adjustment for

all the changes that are included in that

Form 3115 generating such adjustment

and a single positive § 481(a) adjustment

for all the changes that are included in

that Form 3115 generating such adjustment. For example, a taxpayer files a

single Form 3115 to change the depreciation methods, recovery periods, and/

or conventions under § 168(a) resulting

from the reclassification of two computers from nonresidential real property to

5-year property, one office desk from

nonresidential real property to 7-year

property, and two office desks from

5-year property to 7-year property . On

that Form 3115, the taxpayer must provide either (i) a single net § 481(a) adjustment that covers all the changes resulting

from all of these reclassifications, or (ii)

a single negative § 481(a) adjustment

that covers the changes resulting from

the reclassifications of the two computers and one office desk from nonresidential real property to 5-year property

and 7-year property, respectively, and a

single positive § 481(a) adjustment that

covers the changes resulting from the

reclassifications of the two office desks

from 5-year property to 7-year property .

(b) A taxpayer making both this change

and a change to a UNICAP method under

section 12 .01, 12 .02, 12 .08, or 12 .12 of

this revenue procedure (as applicable)

for the same year of change should file

a single Form 3115 for both changes, in

which case the taxpayer must enter the

June 9, 2025

designated automatic accounting method

change numbers for both changes on the

appropriate line on that Form 3115. See

section 6.03(1)(b) of Rev. Proc. 2015-13

for information on making concurrent

changes. For example, a qualified small

taxpayer must include on the single Form

3115 the information required by section

6.01(4)(a) of this revenue procedure for

this change and the information required

by the lines on Form 3115 applicable

to the UNICAP method change, including Part II lines 14 and 15, Part IV, and

Schedule D, and must include a separate

response to each line on Form 3115 that

is applicable to both changes (such as

Part II, lines 6b, 7, 8b, 14, and, as applicable for this change, Part IV) for which

the taxpayer’s response is different for

this change and the change to a UNICAP

method.

(9) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

6.01 is “7.”

(10) Contact information. For further

information regarding a change under this

section, contact James Liechty at (202)

317-7005 (not a toll-free number).

.02 Permissible to permissible method

of accounting for depreciation.

(1) Description of change. This change

applies to a taxpayer that wants to change

from a permissible method of accounting

for depreciation under § 56(g)(4)(A)(iv)

(as in effect on the day before the date of

enactment of Public Law 115-97, 131 Stat.

2054 (Dec. 22, 2017), commonly referred

to as the Tax Cuts and Jobs Act (TCJA))

or § 167 to another permissible method of

accounting for depreciation under § 56(g)

(4)(A)(iv) (as in effect on the day before

the date of enactment of the TCJA) or

§ 167. Pursuant to § 1.167(a)-7(a) and (c),

a taxpayer may account for depreciable

property either by treating each individual

asset as an account or by combining two

or more assets in a single account and, for

each account, depreciation allowances are

computed separately.

(2) Applicability.

(a) In general. This change applies to

any taxpayer wanting to make a change

in method of accounting for depreciation

specified in section 6.02(4) of this revenue

procedure for the property in an account:

June 9, 2025

(i) for which the present and proposed

methods of accounting for depreciation

specified in section 6.02(4) of this revenue

procedure are permissible methods for the

property under § 56(g)(4)(A)(iv) (as in

effect on the day before the date of enactment of the TCJA) or § 167; and

(ii) that is owned by the taxpayer at the

beginning of the year of change.

(b) Inapplicability. This change does

not apply to:

(i) a taxpayer that is required under

§ 263A and the regulations thereunder to

capitalize the costs with respect to which

the taxpayer wants to change its method

of accounting under this section 6.02 if

the taxpayer is not capitalizing these costs,

unless the taxpayer concurrently changes

its method to capitalize these costs in

conjunction with a change to a UNICAP

method under section 12.01, 12.02, 12.08,

or 12.12 of this revenue procedure (as

applicable);

(ii) any property to which § 1016(a)(3)

(regarding property held by a tax-exempt

organization) applies;

(iii) any property described in § 167(f)

(regarding certain property excluded from

§ 197);

(iv) any property subject to § 167(g)

(regarding property depreciated under the

income forecast method);

(v) any property for which depreciation is determined under § 56(a)(1),

§ 56(g)(4)(A)(i), (ii), (iii), or (v) (as in

effect on the day before the date of enactment of the TCJA), § 168, § 1400I (as in

effect on the day before the date of enactment of the Tax Technical Corrections

Act of 2018, Pub. L. No. 115-141, Division U, 132 Stat. 1211 (March 23, 2018)),

§ 1400L(c) (as in effect on the day before

the date of enactment of the Tax Technical Corrections Act of 2018), § 168 prior

to its amendment in 1986 (former § 168),

or any additional first year depreciation

deduction provision of the Code (for

example, § 168(k), § 168(l), § 1400L(b)

(as in effect on the day before the date of

enactment of the Tax Technical Corrections Act of 2018), or § 1400N(d) (as in

effect on the day before the date of enactment of the Tax Technical Corrections

Act of 2018));

(vi) any property that the taxpayer

elected under § 168(f)(1) or former

§ 168(e)(2) to exclude from the appli-

1494

cation of, respectively, § 168 or former

§ 168;

(vii) any property for which depreciation is determined in accordance with

§ 1.167(a)-11 (ADR);

(viii) any depreciable property for

which the taxpayer is changing the depreciation method pursuant to § 1.167(e)-1(b)

(change from declining-balance method

to straight-line method), § 1.167(e)-1(c)

(certain changes for § 1245 property),

or § 1.167(e)-1(d) (certain changes for

§ 1250 property). These changes must be

made prospectively and are not permitted

under the cited regulations for property

for which the depreciation is determined

under § 168, § 1400I (as in effect on the

day before the date of enactment of the

Tax Technical Corrections Act of 2018),

§ 1400L(c) (as in effect on the day before

the date of enactment of the Tax Technical Corrections Act of 2018), former

§ 168, or any additional first year depreciation deduction provision of the Code (for

example, § 168(k), § 168(l), § 1400L(b)

(as in effect on the day before the date of

enactment of the Tax Technical Corrections Act of 2018), or § 1400N(d) (as in

effect on the day before the date of enactment of the Tax Technical Corrections

Act of 2018)); or

(ix) any distributor commissions (as

defined by section 2 of Rev. Proc. 200038, 2000-2 C.B. 310, as modified by Rev.

Proc. 2007-16, 2007-1 C.B. 358) for which

the taxpayer is changing the useful life

under the distribution fee period method

or the useful life method (both described

in Rev. Proc. 2000-38). A change in this

useful life is corrected by adjustments in

the applicable taxable year provided under

§ 1.446-1(e)(2)(ii)(d)(5)(iv).

(3) Certain eligibility rule inapplicable. The eligibility rule in section 5.01(1)

(d) of Rev. Proc. 2015-13, 2015-5 I.R.B.

419, does not apply to this change.

(4) Changes covered. This section 6.02

only applies to the following changes in

methods of accounting for depreciation:

(a) a change from the straight-line

method to the sum-of-the-years-digits

method, the sinking fund method, the

unit-of-production method, or the declining-balance method using any proper percentage of the straight-line rate;

(b) a change from the declining-balance method using any percentage of the

Bulletin No. 2025–24

straight-line rate to the sum-of-the-yearsdigits method, the sinking fund method,

or the declining-balance method using a

different proper percentage of the straightline rate;

the declining-balance method using any

proper percentage of the straight-line rate,

or the straight-line method;

(d) a change from the unit-of-production method to the straight-line method;

(e) a change from the sinking fund

method to the straight-line method, the

unit-of-production method, the sum-ofthe-years-digits method, or the declining-balance method using any proper percentage of the straight-line rate;

(f) a change in the interest factor used

in connection with a compound interest

method or sinking fund method;

(g) a change in averaging convention as

set forth in § 1.167(a)-10(b). However, as

specifically provided in § 1.167(a)-10(b),

in any taxable year in which an averaging convention substantially distorts the

depreciation allowance for the taxable

year, it may not be used (see Rev. Rul.

73-202, 1973-1 C.B. 81);

(h) a change from charging the depreciation reserve with costs of removal and

crediting the depreciation reserve with

salvage proceeds to deducting costs of

removal as an expense and including salvage proceeds in taxable income as set

forth in § 1.167(a)-8(e)(2). See Rev. Rul.

74-455, 1974-2 C.B. 63. This section 6.02

applies to this change, however, only if:

(i) the change is applied to all items in

the account for which the change is being

made; and

(ii) the removal costs are not required

to be capitalized under any provision of

the Code (for example, § 263(a), § 263A,

or § 280B);

(i) a change from crediting the depreciation reserve with the salvage proceeds

realized on normal retirement sales to

computing and recognizing gains and

losses on the sales (see Rev. Rul. 70-165,

1970-1 C.B. 43);

(j) a change from crediting ordinary income (including the combination

method of crediting the lesser of estimated

salvage value or actual salvage proceeds

to the depreciation reserve, with any

excess of salvage proceeds over estimated

Bulletin No. 2025–24

salvage value credited to ordinary income)

with the salvage proceeds realized on normal retirement sales, to computing and

recognizing gains and losses on the sales

(see Rev. Rul. 70-166, 1970-1 C.B. 44);

(k) a change from item accounting for

specific assets to multiple asset accounting (pooling) for the same assets, or vice

versa;

(l) a change from one type of multiple

asset accounting (pooling) for specific

assets to a different type of multiple asset

accounting (pooling) for the same assets;

(m) a change from one method

described in Rev. Proc. 2000-38 for amortizing distributor commissions (as defined

by section 2 of Rev. Proc. 2000-38) to

another method described in Rev. Proc.

2000-38 for amortizing distributor commissions; or

(n) a change from pooling to a single

asset, or vice versa, for distributor commissions (as defined by section 2 of Rev.

Proc. 2000-38) for which the taxpayer is

using the distribution fee period method

or the useful life method (both described

in Rev. Proc. 2000-38).

(5) Additional requirements. A taxpayer also must comply with the following:

(a) Basis for depreciation. At the

beginning of the year of change, the basis

for depreciation of property to which this

change applies is the adjusted basis of the

property as provided in § 1011 at the end

of the taxable year immediately preceding the year of change (determined under

taxpayer’s present method of accounting

for depreciation). If applicable under the

taxpayer’s proposed method of accounting for depreciation, this adjusted basis is

reduced by the estimated salvage value of

the property (for example, a change to the

straight-line method).

(b) Rate of depreciation. The rate of

depreciation for property changed to:

(i) the straight-line or the sum-of-theyears-digits method of depreciation must

be based on the remaining useful life of

the property as of the beginning of the

year of change; or

(ii) the declining-balance method of

depreciation must be based on the useful life of the property measured from

the placed-in-service date, and not the

expected remaining life from the date the

change becomes effective.

1495

changes in method of depreciation to

the sum-of-the-years-digits or declining-balance method, the property must

meet the requirements of § 1.167(b)-0 or

§ 1.167(c)-1, as appropriate.

(d) Public utility property. If any item

of property is public utility property within

the meaning of former § 167(l)(3)(A), the

taxpayer (including a qualified small taxpayer as defined in section 6.01(4)(b) of

this revenue procedure) must attach to

the Form 3115 a statement providing that

the taxpayer agrees to the following additional terms and conditions:

(i) a normalization method of accounting within the meaning of former § 167(l)

(3)(G) will be used for the public utility

property subject to the Form 3115; and

(ii) within 30 calendar days of filing the

federal income tax return for the year of

change, the taxpayer will provide a copy

of the completed Form 3115 to any regulatory body having jurisdiction over the

public utility property subject to the Form

3115.

(6) Reduced filing requirement for

qualified small taxpayers. A qualified

small taxpayer, as defined in section

6.01(4)(b) of this revenue procedure, is

required to complete only the following

information on Form 3115 (Rev. December 2022) to make this change:

(a) The identification section of page 1

(above Part I);

(b) The signature section at the bottom

of page 1;

(d) Part II, all lines except lines 13,

15b, 16, 17, and 19;

(e) Part IV, line 25; and

(f) Schedule E.

(7) Section 481(a) adjustment. Because

the adjusted basis of the property is not

changed as a result of a method change

made under this section 6.02, no items are

being duplicated or omitted. Accordingly,

a § 481(a) adjustment is neither required

nor permitted.

(8) Concurrent automatic change.

(a) A taxpayer making this change for

more than one asset for the same year of

change should file a single Form 3115 for

all such assets.

(b) A taxpayer making both this change

and a change to a UNICAP method under

section 12.01, 12.02, 12.08, or 12.12 of

June 9, 2025

this revenue procedure (as applicable)

for the same year of change should file

a single Form 3115 for both changes, in

which case the taxpayer must enter the

designated automatic accounting method

change numbers for both changes on the

appropriate line on that Form 3115 . See

section 6 .03(1)(b) of Rev . Proc . 2015-13

for information on making concurrent

changes. For example, a qualified small

taxpayer must include on the single Form

3115 the information required by section

6 .02(6) of this revenue procedure for this

change and the information required by

the lines on Form 3115 applicable to the

UNICAP method change, including Part

II lines 14 and 15, Part IV, and Schedule

D, and must include a separate response to

each line on Form 3115 that is applicable

to both changes (such as Part II lines 6b, 7,

8b, 14, and, as applicable for this change,

Part IV) for which the taxpayer’s response

is different for this change and the change

to a UNICAP method .

(9) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change under this section

6 .02 is “8 .”

(10) Contact information . For further

information regarding a change under

this section, contact Bruce Chang at (202)

317-7005 (not a toll-free number) .

.03 Sale, lease, or financing transactions .

(1) Description of change and scope .

(a) Applicability . This change applies

to a taxpayer that wants to change its

method of accounting from:

(i) improperly treating property as sold

by the taxpayer to properly treating property as leased or financed by the taxpayer;

(ii) improperly treating property as

leased by the taxpayer to properly treating

property as sold or financed by the taxpayer;

(iii) improperly treating property as

financed by the taxpayer to properly treating property as sold or leased by the taxpayer;

(iv) improperly treating property as

purchased by the taxpayer to properly

treating property as leased by the taxpayer; and

(v) improperly treating property as

leased by the taxpayer to properly treating

property as purchased by the taxpayer .

June 9, 2025

(b) Inapplicability . This change does

not apply to:

(i) a rent-to-own dealer that wants to

change its method of accounting for rentto-own contracts described in section 3 of

Rev . Proc . 95-38, 1995-2 C .B . 397; or

(ii) a taxpayer that holds assets for sale

or lease, if any asset so held is not the subject of a sale or lease transaction as of the

beginning of the year of change .

(2) Manner of making the change .

(a) Required statement . A taxpayer

changing its method of accounting under

this section 6 .03 must submit a statement

with the Form 3115 that provides the

name of the counterparty to the sale, lease,

or financing transactions as of the beginning of the year of change .

(b) Section 481(a) adjustment . A

change under this section 6 .03 is made

with a § 481(a) adjustment .

(3) No ruling on the characterization of any transaction as a sale, lease,

or financing transaction . The consent

granted under section 9 of Rev . Proc .

2015-13 for a change specified in this

section 6 .03 is not a determination by

the Commissioner that the taxpayer has

properly characterized any transaction as

a sale, lease, or financing transaction and

does not create any presumption that the

proposed characterization of any transaction as a sale, lease, or financing transaction is permissible . The director will

ascertain whether the taxpayer’s characterization of any transaction as a sale,

lease, or financing transaction is permissible .

(4) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change under this section

6 .03 is “10 .”

(5) Contact information . For further

information regarding a change under this

section, contact Edward Schwartz at (202)

317-7006 (not a toll-free number) .

.04 Change in general asset account

treatment due to a change in the use of

MACRS property .

(1) Description of change .

(a) Applicability . This change applies

to a taxpayer that wants to change the

method of accounting for general asset

account treatment of MACRS property (as defined in § 1.168(b)-1(a)(2))

to the method of accounting provided in

1496

§ 1 .168(i)-1(c)(2)(ii)(I) or § 1 .168(i)-1(h)

(2), which applies when there is a change

in the use of MACRS property pursuant to

§ 1 .168(i)-4(d) .

(b) Taxpayer has not adopted a method

of accounting for the item of property . If a

taxpayer does not satisfy section 6 .04(1)

(a) of this revenue procedure for an item

of MACRS property because a change in

the use of this item of MACRS property

occurred in the taxable year immediately

preceding the year of change (1-year

change in use property), the taxpayer may

change from the impermissible method

for general asset account treatment to

the permissible method provided in §

1 .168(i)-1(c)(2)(ii)(I) or § 1 .168(i)-1(h)

(2) for the 1-year change in use property

by filing a Form 3115. Alternatively, the

taxpayer may change from the impermissible method for general asset account

treatment to the permissible method

provided in § 1 .168(i)-1(c)(2)(ii)(I) or

§ 1 .168(i)-1(h)(2) for a 1-year change in

use property by filing an amended federal

income tax return, or an administrative

adjustment request under § 6227 (AAR),

as applicable, for the year of change in the

use of such property provided such filing

occurs prior to the date the taxpayer files

its federal income tax return for the taxable year succeeding the year of change in

the use of such property .

(i) The change described in section

6 .04(1)(a) of this revenue procedure does

not apply to any property to which section 4 .05 of Rev . Proc . 2020-22, 2020-18

I .R .B . 745, applies unless the taxpayer

and property are within the scope of Rev .

Proc . 2021-28, 2021-27 I .R .B . 5 . (See sections 4 .02 and 4 .03 of Rev . Proc . 2020-22,

as applicable, for making such changes for

such property .); and

(ii) The change described in section

6 .04(1)(a) of this revenue procedure does

not apply to any property to which section 5 .04 of Rev . Proc . 2020-22, 202018 I .R .B . 745, applies . (See section 5 .02

of Rev . Proc . 2020-22 for making such

change for such property .) .

(2) Eligibility rule inapplicable . The

eligibility rule in section 5 .01(1)(d) of

Rev . Proc . 2015-13, 2015-5 I .R .B . 419,

does not apply to a taxpayer making this

change .

(3) Manner of making change .

Bulletin No. 2025–24

(a) The change is made on a modified

cut-off basis (as defined in § 1.446-1(e)

(2)(ii)(d)(5)(iii)) and, thus, the adjusted

depreciable basis of the MACRS property

as of the beginning of the year of change

is recovered using the proposed method of

accounting for general asset account treatment . Accordingly, a § 481(a) adjustment

is neither permitted nor required . See

§ 1 .168(i)-1(h)(2)(ii) and (iii) for more

information regarding how to establish

the general asset account when a change

in the use of MACRS property occurs pursuant to § 1 .168(i)-4(d) .

(b) Reduced filing requirement for

qualified small taxpayers. A qualified

small taxpayer, as defined in section

6 .01(4)(b) of this revenue procedure, is

required to complete only the following

information on Form 3115 (Rev . December 2022) to make this change:

(i) The identification section of page 1

(above Part I);

(ii) The signature section at the bottom

of page 1;

(iii) Part I;

(iv) Part II, all lines except lines 13,

15b, 16, 17, and 19;

(v) Part IV, line 25; and

(vi) Schedule E, all lines except lines 1,

4c, 5, 6, 7b, and 7c .

(4) Concurrent automatic change .

(a) A taxpayer making this change for

more than one asset for the same year of

change should file a single Form 3115 for

all such assets .

(b) A taxpayer making this change

and a change under section 6 .05, section

6 .12(3)(b), and/or section 6 .15 of this

revenue procedure for the same year of

change should file a single Form 3115

for all such changes and must enter the

designated automatic accounting method

change numbers for the changes on the

appropriate line on the Form 3115 . See

section 6 .03(1)(b) of Rev . Proc . 2015-13

for information on making concurrent

changes .

(5) Designated automatic accounting

method change number . The designated

automatic accounting method change

number for a change under this section

6 .04 is “87 .”

(6) Contact information . For further

information regarding a change under this

section, contact Elizabeth Binder at (202)

317-7005 (not a toll-free number) .

Bulletin No. 2025–24

1497

and property are within the scope of Rev .

Proc . 2021-28, 2021-27 I .R .B . 5 . (See sections 4 .02 and 4 .03, or 5 .02 of Rev . Proc .

2020-22, as applicable, for making such

change for such property .);

(ii) The change described in section

6 .05(1)(a)(i) of this revenue procedure

does not apply to any property to which

section 5 .04 of Rev . Proc . 2020-22, 202018 I .R .B . 745, applies . (See section 5 .02

of Rev . Proc . 2020-22 for making such

change for such property .); and

(iii) The change described in this section 6 .05 does not apply to any property

that is not owned by the taxpayer at the

beginning of the year of change .

(2) Eligibility rule inapplicable . The

eligibility rule in section 5 .01(1)(d) of

Rev . Proc . 2015-13, 2015-5 I .R .B . 419,

does not apply to a taxpayer making this

change .

(3) Reduced filing requirement for

qualified small taxpayers. A qualified

small taxpayer, as defined in section

6 .01(4)(b) of this revenue procedure, is

required to complete only the following

information on Form 3115 (Rev . December 2022) to make this change:

(a) The identification section of page 1

(above Part I);

(b) The signature section at the bottom

of page 1;

(d) Part II, all lines except lines 13,

15b, 16, 17, and 19;

(e) Part IV, all lines except line 25; and

(f) Schedule E, all lines except lines 1,

4c, 5, 6, 7b, and 7c .

(4) Section 481(a) adjustment . A taxpayer changing its method of accounting

under this section 6 .05 is required to calculate a § 481(a) adjustment as of the first

day of the year of change as if the proposed method of accounting had always

been used by the taxpayer beginning with

the taxable year in which the change in the

use of the MACRS property occurred by

the taxpayer .

(5) Concurrent automatic change .

(a) A taxpayer making this change for

more than one asset for the same year of

change should file a single Form 3115 for

all such assets and provide a single net

§ 481(a) adjustment for all the changes

included in that Form 3115 . If one or

more of the changes in that single Form

3115 generate a negative § 481(a) adjust-

June 9, 2025

ment and other changes in that same

Form 3115 generate a positive § 481(a)

adjustment, the taxpayer may provide a

single negative § 481(a) adjustment for

all the changes that are included in that

Form 3115 generating such adjustment

and a single positive § 481(a) adjustment

for all the changes that are included in

that Form 3115 generating such adjustment.

(b) A taxpayer making this change

and a change under section 6.04, section

6.12(3)(b), and/or section 6.15 of this

revenue procedure for the same year of

change should file a single Form 3115

for all such changes and must enter the

designated automatic accounting method

change numbers for the changes on the

appropriate line on the Form 3115. See

section 6.03(1)(b) of Rev. Proc. 2015-13

for information on making concurrent

changes.

(6) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

6.05 is “88.”

(7) Contact information. For further

information regarding a change under this

section, contact Elizabeth Binder at (202)

317-7005 (not a toll-free number).

.06 Depreciation of qualified non-personal use vans and light trucks.

(1) Description of change. This change

applies to a taxpayer that wants to change

the method of accounting for depreciation

for certain vehicles in accordance with

§ 1.280F-6(f)(2)(iv). Section 1.280F6(f)(2)(iv) applies to a truck or van that

is a qualified nonpersonal use vehicle as

defined under § 1.274-5T(k), was placed

in service by the taxpayer before July 7,

2003, and was treated by the taxpayer as a

passenger automobile under § 1.280F-6T

as in effect prior to July 7, 2003. If the taxpayer files Form 3115, in accordance with

§ 1.280F-6(f)(2)(iv), the treatment of the

truck or van will be changed from property to which § 280F(a) applies to property to which § 280F(a) does not apply.

(2) Reduced filing requirement for

qualified small taxpayers. A qualified

small taxpayer, as defined in section

6.01(4)(b) of this revenue procedure, is

required to complete only the following

information on Form 3115 (Rev. December 2022) to make this change:

June 9, 2025

(a) The identification section of page 1

(above Part I);

(b) The signature section at the bottom

of page 1;

(d) Part II, all lines except lines 13,

15b, 16, 17, and 19;

(e) Part IV, all lines except line 25; and

(f) Schedule E.

(3) Concurrent automatic change. A

taxpayer making this change for more

than one asset for the same year of change

should file a single Form 3115 for all such

assets and provide a single net § 481(a)

adjustment for all the changes included

in that Form 3115. If one or more of the

changes in that single Form 3115 generate

a negative § 481(a) adjustment and other

changes in that same Form 3115 generate a positive § 481(a) adjustment, the

taxpayer may provide a single negative

§ 481(a) adjustment for all the changes

that are included in that Form 3115 generating such adjustment and a single positive

§ 481(a) adjustment for all the changes

that are included in that Form 3115 generating such adjustment.

(4) Designated automatic accounting

method change number. The designated

automatic accounting method change

number for a change under this section

6.06 is “89.”

(5) Contact information. For further

information regarding a change under this

section, contact C. Dylan Durham at (202)

317-7005 (not a toll-free number).

.07 Impermissible to permissible

method of accounting for depreciation or

amortization for disposed depreciable or

amortizable property.

(1) Description of change. This change

applies to a taxpayer that wants to make

the change in method of accounting for

depreciation or amortization (depreciation) provided under section 3 of Rev.

Proc. 2007-16, 2007-1 C.B. 358, for an

item of depreciable or amortizable property that has been disposed of by the taxpayer. Section 3 of Rev. Proc. 2007-16

allows a taxpayer to make a change in

method of accounting for depreciation for

the disposed property if the taxpayer used

an impermissible method of accounting

for depreciation for the property under

which the taxpayer did not take into

account any depreciation allowance, or

did take into account some depreciation

1498

but less than the depreciation allowable,

in the year of change (as defined in section

6.07(4) of this revenue procedur

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