Instructions for Form 3115

(Rev. December 2022)

Application for Change in Accounting Method

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue Code unless 

otherwise noted.

All references to Rev. Proc. 2015-13 are to 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; Rev. Proc. 

2021-26, 2021-22 I.R.B. 116; by Rev. Proc. 2017-59, 2017-48 

I.R.B. 543, and section 17.02 of Rev. Proc. 2016-1, 2016-1 

I.R.B. 1), or any successor.

All references to Rev. Proc. 2022-14 and the List of Automatic 

Changes are to Rev. Proc. 2022-14, 2022-7 I.R.B. 502 (as 

modified by Rev. Proc. 2022-23, 2022-18 I.R.B. 105 and Rev. 

Proc. 2023-11, 2023-3 I.R.B. 417) or any successor.

All references to Rev. Proc. 2023-1 are to Rev. Proc. 2023-1, 

2023-1 I.R.B. 1, or any successor (updated annually).

Future Developments

For the latest information about developments related to Form 

3115 and its instructions, such as legislation enacted after they 

were published, go to IRS.gov/Form3115.

What's New

Changes related to the deferral method for advance payments, cost offset methods, and/or the applicable financial 

statement income inclusion rule. The instructions for 

Schedule B have been updated to include additional information 

about accounting method changes relating to the deferral 

method for advance payments, cost offset methods, and 

methods to conform to the applicable financial statement (AFS) 

income inclusion rule under section 451.

Research and experimental expenditures. Effective for 

specified research or experimental expenditures paid or incurred 

in tax years beginning after 2021, no deduction is allowed for 

such expenditures. Instead, you must capitalize and amortize 

these amounts over a 5-year period for amounts attributable to 

domestic research and over a 15-year period for amounts 

attributable to foreign research. See DCN 265 and Rev. Proc. 

2023-11, 2023-3 I.R.B. 417.

General Instructions

Purpose of Form

File Form 3115 to request a change in either an overall 

accounting method or the accounting treatment of any item.

Method Change Procedures

When filing Form 3115, you must determine if the IRS 

has issued any new published guidance which includes 

revenue procedures, revenue rulings, notices, 

regulations, or other relevant guidance in the Internal Revenue 

Bulletin (I.R.B ) For the latest information, go to IRS.gov.

For general application procedures on requesting accounting 

method changes, see Rev. Proc. 2015-13. Rev. Proc. 2015-13 

provides procedures for both automatic and non-automatic 

accounting method changes.

CAUTION

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CAUTION

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Automatic change procedures. Unless otherwise provided in 

published guidance, you must file under the automatic change 

procedures if you are eligible to request consent to make an 

accounting method change under the automatic change 

procedures for the requested year of change. See the 

instructions for Part I Information for Automatic Change Request, 

later, and the List of Automatic Changes in Rev. Proc. 2022-14.

No user fee is required for a Form 3115 filed under the 

automatic change procedures. An applicant that timely files and 

complies with the automatic change procedures is granted 

consent to change its accounting method, subject to review by 

the IRS National Office and operating division director. If it is 

reviewed by the IRS, you will be notified if information in addition 

to that requested on Form 3115 is required or if your request is 

denied. Ordinarily, you are required to file a separate Form 3115 

for each accounting method change. However, in some cases, 

you are required or permitted to file a single Form 3115 for 

particular concurrent accounting method changes. See section 

6.03(1)(b) of Rev. Proc. 2015-13 for more information.

Note. The List of DCNs (Designated automatic accounting 

method change numbers) at the end of these instructions is a list 

of many accounting method changes and is presented for 

informational purposes only and subject to the most recently 

issued revenue procedures.

You may qualify for a reduced Form 3115 filing 

requirement for certain DCNs. A reduced Form 3115 

filing requirement involves completing only certain lines 

and schedules of Form 3115. For qualifying changes and filing 

requirements, see Rev. Proc. 2022-14. For example, qualified 

small taxpayers are eligible for a reduced Form 3115 filing 

requirement for DCNs 7, 8, 21, 88, 89, 107, 121, 145, 157, 

184-193, 198, 199, 200, 205, 206, 207, and 222.

Non-automatic change procedures. If you do not qualify to 

file under the automatic change procedures for the requested 

accounting method change for the requested year of change, 

you may be able to file under the non-automatic change 

procedures. See Non-automatic change-scope and eligiblity 

rules , under Part III, later. If the requested change is approved 

by the IRS National Office, the filer will receive a letter ruling on 

the requested change. File a separate Form 3115 for each 

unrelated item or submethod that is being changed. A user fee is 

required. See the instructions for Part III for more information.

Who Must File

The filer is the entity or person required to file Form 3115, 

whether on its own behalf or on behalf of another entity. An 

applicant is an entity, a person, or a separate and distinct trade 

or business of an entity or a person (for purposes of Regulations 

section 1.446-1(d)), whose accounting method is being 

changed.

For a consolidated group of corporations, the common parent 

corporation must file Form 3115 for an accounting method 

change for itself and for any member of the consolidated group. 

For example, the common parent corporation of a consolidated 

group is the filer when requesting an accounting method change 

for another member of that consolidated group (or a separate 

and distinct trade or business of that member), and the other 

TIP

Feb 7, 2023 Cat. No. 63215H
member (or trade or business) on whose behalf Form 3115 is 

filed is the applicant.

For information on the difference between a filer and an 

applicant, see Name(s) and Signature(s), later.

For information on a controlled foreign corporation (CFC) or 

10/50 corporation without a U.S. trade or business, see section 

6.02(6) of Rev. Proc. 2015-13.

Generally, a filer must file a separate Form 3115 for each 

applicant seeking consent to change an accounting method. A 

separate Form 3115 and user fee (for non-automatic change 

requests) must be submitted for each applicant and each 

separate trade or business of an applicant, including a qualified 

subchapter S subsidiary (QSub) or a single-member limited 

liability company (LLC), requesting an accounting method 

change. See section 9.02 of Rev. Proc. 2023-1.

However, identical accounting method changes for two or 

more of the following in any combination may be included in a 

single Form 3115.

1. Entities with a common sponsor.

2. Members of a consolidated group;

3. Separate and distinct trades or businesses (for purposes 

of Regulations section 1.446-1(d)) of that entity or member(s) of 

a consolidated group. Separate and distinct trades or 

businesses include QSubs and single-member LLCs;

4. Partnerships that are wholly owned within a consolidated 

group; and

5. CFCs and 10/50 corporations that do not engage in a 

trade or business within the United States where (i) all controlling 

domestic shareholders (as provided in Regulations section 

1.964-1(c)(5)) of the CFCs and of the 10/50 corporations, as 

applicable, are members of a consolidated group; or (ii) the 

taxpayer is the sole controlling domestic shareholder of the 

CFCs or of the 10/50 corporations.

For information on what is an identical accounting method 

change, see section 15.07(4) of Rev. Proc. 2023-1.

When and Where To File

Automatic change requests. Except if instructed differently, 

you must file Form 3115 under the automatic change procedures 

in duplicate as follows.

• Attach the original Form 3115 to the filer's timely filed 

(including extensions) federal income tax return for the year of 

change. The original Form 3115 attachment does not need to be 

signed.

• File a copy of the signed Form 3115 (duplicate copy) with the 

IRS National Office at the address provided in the Address Chart 

for Form 3115, later, no earlier than the first day of the year of 

change and no later than the date the original is filed with the 

federal income tax return for the year of change. This signed 

Form 3115 may be a photocopy. For more on the signature 

requirement, see Name(s) and Signature(s), later. Alternatively, 

the duplicate copy of the signed Form 3115 may be submitted by 

fax.

The IRS does not send acknowledgements of receipt for 

automatic change requests.

For filing procedures relating to automatic change 

requests for certain foreign corporations and foreign 

partnerships, see section 6.03(1)(a)(ii) and (iii) of Rev. 

Proc. 2015-13.

Non-automatic change requests. You must file Form 3115 

under the non-automatic change procedures during the tax year 

for which the change is requested, unless otherwise provided by 

published guidance. See section 6.03(2) of Rev. Proc. 2015-13. 

TIP

File Form 3115 with the IRS National Office at the address listed 

in the Address Chart for Form 3115 below. Alternatively, Form 

3115 may be submitted by secure electronic facsimile or 

encrypted electronic mail. File Form 3115 as early as possible 

during the year of change to provide adequate time for the IRS to 

respond prior to the due date of the filer's return for the year of 

change.

The IRS normally sends an acknowledgment of receipt within 

60 days after receiving a Form 3115 filed under the 

non-automatic change procedures. If the filer does not receive 

an acknowledgment of receipt for a non-automatic change 

request within 60 days, the filer can inquire to:

Internal Revenue Service

Control Clerk

CC:IT&A, Room 4512

1111 Constitution Ave. NW

Washington, DC 20224

In specified circumstances, you are required to send 

additional copies of Form 3115 to another IRS 

address. For example, another copy of Form 3115 

would be sent when an applicant is under examination, before 

an Appeals office, or before a federal court, or is a certain foreign 

corporation or certain foreign partnership. See section 6.03(3) of 

Rev. Proc. 2015-13 for more information. Also see the 

instructions for Part II, lines 6 and 8, later.

Address Chart for Form 3115

File Form 3115 at the applicable IRS address listed below.

A non-automatic change 

request

An automatic change 

request (Form 3115 copy)

Delivery by mail Internal Revenue Service

Attn: CC:PA:LPD:TSS

P.O. Box 7604

Benjamin Franklin Station

Washington, DC 20044

Internal Revenue Service

Ogden, UT 84201

M/S 6111

Delivery by 

private delivery 

service

Internal Revenue Service

Attn: CC:PA:LPD:TSS

Room 5336 

1111 Constitution Ave. NW

Washington, DC 20224

Internal Revenue Service

1973 N. Rulon White Blvd.

Ogden, UT 84201

Attn: M/S 6111

Delivery by 

facsimile

877-773-4950 (Secure) 844-249-8134

Delivery by 

encrypted 

electronic mail

Userfee@irscounsel.treas.

gov

N/A

Late Application

In general, a filer that fails to timely file a Form 3115 will not be 

granted an extension of time to file except in unusual and 

compelling circumstances. See section 6.03(4)(b) of Rev. Proc. 

2015-13 and Regulations section 301.9100-3 for the standards 

that must be met. For information on the period of limitations, 

see section 5.03(2) of Rev. Proc. 2023-1.

However, an automatic 6-month extension from the due date 

(excluding any extension) of the federal income tax return to file 

Form 3115 may be available for automatic change requests. For 

details, see section 6.03(4)(a) of Rev. Proc. 2015-13, and 

Regulations section 301.9100-2.

An applicant submitting a ruling request for an extension of 

time to file Form 3115 must pay a user fee for its extension 

request and, in the case of a non-automatic change request, a 

separate user fee for its accounting method change request. For 

the schedule of user fees, see section (A)(3)(b), (A)(4), and (A)

(5)(d) in Appendix A of Rev. Proc. 2023-1.

CAUTION

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Useful Items

Refer to the following items for more information on changing an 

accounting method.

Rev. Proc. 2023-1. See Rev. Proc. 2023-1. This revenue 

procedure provides specific and additional procedures for 

requesting an accounting method change, including the user fee 

for non-automatic method of change requests.

Rev. Proc. 2015-13. See Rev. Proc. 2015-13. This revenue 

procedure provides the automatic and non-automatic method 

change procedures to obtain consent of the IRS to change an 

accounting method.

Rev. Proc. 2022-14. See Rev. Proc. 2022-14. This revenue 

procedure contains a list of accounting method changes that 

may be eligible to file under the automatic method change 

procedures.

Inflation-adjusted amount. Certain automatic accounting 

method changes require that the applicant’s average annual 

gross receipts for the 3 preceding tax years be at or less than the 

“inflation-adjusted amount” (set forth in an annual revenue 

procedure) See, for example, DCN 22. For years beginning in 

2022, the inflation adjusted amount is $27,000,000. See Rev. 

Proc. 2021-45.

Pub. 538, Accounting Periods and Methods. This 

publication provides general information on accounting 

methods.

Specific Instructions

Name(s) and Signature(s)

Enter the name of the filer on the first line of page 1 of Form 

3115.

In general, the filer of Form 3115 is the applicant. However, in 

circumstances where Form 3115 is filed on behalf of the 

applicant, enter the filer's name and identification number on the 

first line of Form 3115 and enter the applicant's name and 

identification number on the fourth line. Receivers, trustees, or 

assignees must sign any Form 3115 they are required to file.

If Form 3115 is filed for multiple (i) applicants in a 

consolidated group of corporations, (ii) applicants with a 

common sponsor, (iii) CFCs, (iv) wholly owned partnerships 

within a consolidated group, and/or (v) separate and distinct 

trades or businesses (including QSubs or single-member LLCs), 

attach a schedule listing each applicant and its identification 

number (where applicable). This schedule may be combined 

with the information requested for Part III, line 24a (regarding the 

user fee), and Part IV (section 481(a) adjustment). If multiple 

names and signatures are required (for example, in the case of 

CFCs—see instructions below), attach a schedule labeled 

“SIGNATURE ATTACHMENT” to Form 3115, signed under 

penalties of perjury using the same language as in the 

declaration on page 1 of Form 3115.

Individuals. If Form 3115 is filed for a couple who file a joint 

income tax return, enter the names of both spouses on the first 

line and the signatures of both spouses on the signature line.

Partnerships. Enter the name of the partnership on the first line 

of Form 3115. In the signature section, include the signature of 

one of the general partners or LLC members who has personal 

knowledge of the facts and who is authorized to sign. Enter that 

person's name and official title in the space provided. If the 

authorized partner is a member of a consolidated group, then an 

authorized officer of the common parent corporation with 

personal knowledge of the facts must sign.

Non-consolidated corporations, personal service corporations, S corporations, and cooperatives. Enter the name of 

the filer on the first line of Form 3115. In the signature section, 

enter the signature of the officer who has personal knowledge of 

the facts and authority to bind the filer in the matter. Enter that 

officer's name and official title in the space provided.

Consolidated group of corporations. Enter the name of the 

common parent corporation on the first line of Form 3115. Also 

enter the name(s) of the applicant(s) on the fourth line if a 

member of the consolidated group other than, or in addition to, 

the parent corporation is requesting an accounting method 

change. In the signature section, enter the signature of the 

officer of the common parent corporation who has personal 

knowledge of the facts and authority to bind the common parent 

corporation in the matter, and that officer's name and official title 

in the space provided.

Multiple entities with a common sponsor. Enter the name of 

the common sponsor on the first line of Form 3115. Enter on the 

fourth line the name of each entity with the common sponsor that 

is requesting an accounting method change. In the signature 

section, enter the signature of the officer who has personal 

knowledge of the facts and authority to bind the common 

sponsor and the applicants with that common sponsor in the 

matter, and that officer’s name and official title in the space 

provided.

Separate and distinct trade or business of an entity. Enter 

the name of the entity (or common parent corporation if the entity 

is a member of a consolidated group) on the first line of Form 

3115. Also enter the name of the separate and distinct trade or 

business requesting an accounting method change on the fourth 

line. In the signature section, enter the signature of the individual 

who has personal knowledge of the facts and authority to bind 

the separate and distinct trade or business of the entity in the 

matter, and that person's name and official title in the space 

provided.

CFC or 10/50 corporation. For a CFC or 10/50 corporation 

with a U.S. trade or business, enter the name of the designated 

(controlling domestic) shareholder that retains the jointly 

executed consent as provided for in Regulations section 

1.964-1(c)(3)(ii) (or, if the designated shareholder is a member 

of a consolidated group, the common parent corporation) on the 

first line of Form 3115. Enter the name of the CFC or 10/50 

corporation on the fourth line of Form 3115. In addition, a Form 

3115 filed on behalf of the CFC or 10/50 corporation by its 

controlling domestic shareholder(s) (or the common parent) 

must be signed by an authorized officer of the designated 

(controlling domestic) shareholder (or the common parent). If 

there is more than one shareholder, the statement described in 

Regulations section 1.964-1(c)(3)(ii) must be attached to the 

application. Also, the controlling domestic shareholder(s) must 

provide the written notice required by Regulations section 

1.964-1(c)(3)(iii).

Estates or trusts. Enter the name of the estate or trust on the 

first line of Form 3115. In the signature section, enter the 

signature of the fiduciary, personal representative, executor, 

administrator, etc., who has personal knowledge of the facts and 

legal authority to bind the estate or trust in the matter, and that 

person's official title in the space provided.

Exempt organizations. Enter the name of the organization on 

the first line of Form 3115. In the signature section, enter the 

signature of a principal officer or other person who has personal 

knowledge of the facts and authority to bind the exempt 

organization in the matter, and that person's name and official 

title in the space provided.

Preparer (other than filer/applicant). If the individual 

preparing Form 3115 is not the filer or applicant, the preparer 

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must also sign, and include the firm's name, where applicable. 

Generally, for both automatic and non-automatic changes, the 

preparer (if not the filer or applicant) must sign the original and 

copies of Form 3115. If Form 3115 is e-filed, the preparer need 

not sign the original e-filed Form 3115 but must still complete the 

preparer information and, if applicable, must sign the duplicate 

automatic Form 3115 copy.

Identification Number

Enter the filer's taxpayer identification number on the first line of 

Form 3115 as follows.

• Individuals enter their social security number (SSN). For a 

resident or nonresident alien, enter an individual taxpayer 

identification number (ITIN). If Form 3115 is for a couple who file 

a joint return, enter the identification numbers of both spouses.

• All others enter the employer identification number (EIN).

• If the filer is the common parent corporation of a consolidated 

group of corporations or a common sponsor of multiple entities, 

enter the EIN of the common parent or common sponsor on the 

first line of Form 3115. If a member of a consolidated group other 

than, or in addition to, the common parent, or if an entity with a 

common parent, or if an entity with a common sponsor is 

requesting an accounting method change, enter the EIN of the 

applicant on the fourth line.

• If the common sponsor is filing Form 3115 on behalf of 

multiple applicants with that common sponsor, or if the common 

parent is filing Form 3115 on behalf of multiple applicants in a 

consolidated group of corporations, multiple CFCs or 10/50 

corporations, or multiple and distinct trades or businesses of a 

member (including QSubs or single-member LLCs), attach a 

schedule listing each applicant and its identification number (if 

applicable).

• If the applicant is a foreign entity that is not otherwise required 

to have or obtain an EIN, enter “Not applicable” in the space 

provided for the identifying number.

Principal Business Activity Code

If the filer is a business, enter the 6-digit principal business 

activity (PBA) code of the filer. The principal business activity of 

the filer is the activity generating the largest percentage of its 

total receipts. See the instructions for the filer's income tax return 

for the filer's PBA code and definition of total receipts.

Address

Include the suite, room, or other unit number after the street 

address. If the post office does not deliver mail to the street 

address and the filer has a P.O. box, show the box number 

instead of the street address.

Year of Change

The year of change is the first tax year the applicant uses the 

proposed accounting method, even if no affected items are 

taken into account for that year. Each applicant (and filer, if also 

an applicant) must list its respective year of change.

Example. A calendar year taxpayer that has consistently 

capitalized certain building repair costs from 2015 to 2020 files a 

Form 3115 to change its method of accounting for building repair 

costs to begin deducting these repair costs in 2021. The year of 

change is calendar year 2021. Each applicant (and filer, if also 

an applicant) must list its respective year of change.

Contact Person

The contact person must be an individual authorized to sign 

Form 3115, or the filer's authorized representative. If this person 

is someone other than an individual authorized to sign Form 

3115, you must attach Form 2848, Power of Attorney and 

Declaration of Representative.

Form 2848

Authorization to (1) represent the filer before the IRS, (2) receive 

a copy of the requested letter ruling, or (3) perform any other 

act(s) must be properly reflected on Form 2848. For further 

details for an authorized representative and a power of attorney, 

see section 9.03(8) and (9) of Rev. Proc. 2023-1.

A Form 2848 must be attached to Form 3115 in order for the 

IRS to discuss a Form 3115 with the filer's representative, even if 

the filer's representative prepared and/or signed the Form 3115.

If the filer intends to have the authorized representative 

receive copies of correspondences regarding its Form 

3115, it must check the appropriate box on Form 2848.

Fax Number for Option To Receive 

Correspondence by Fax or Electronic Facsimile

Check the box to indicate whether the filer wants to receive, or 

wants its authorized representative to receive, a copy of 

correspondence regarding its Form 3115 (for example, 

additional information letters or the letter ruling) by fax or 

electronic facsimile. If the filer answered yes, the filer must 

attach a statement indicating the applicant’s intention to request 

to correspond by fax or electronic facsimile and include the 

contact person’s fax number. The listed person(s) must be either 

authorized to sign the Form 3115 or an authorized 

representative of the filer that is included on Form 2848. For 

further details on the fax procedures, see section 9.04(3) of Rev. 

Proc. 2023-1.

Option To Receive Correspondence by 

Encrypted Email Attachment

A filer that wants to receive, or wants its authorized 

representative to receive, correspondence regarding its Form 

3115 (for example, additional information letters or the letter 

ruling) by encrypted email attachment must attach to Form 3115 

a statement requesting the service. The request must specify 

which email encryption method is to be used and, if the taxpayer 

has not already provided the appropriate memorandums of 

understanding (MOUs) to use encrypted email attachments, 

must include those MOUs. For acceptable email encryption 

methods and procedures, see section 9.05(3) of Rev. Proc. 

2023-1.

Type of Accounting Method Change 

Requested

Check the appropriate box on Form 3115 to indicate the type of 

change being requested.

• Depreciation or amortization. Check this box for a change 

in (1) depreciation or amortization (for example, the depreciation 

method or recovery period); (2) the treatment of salvage 

proceeds or costs of removal; (3) the method of accounting for 

dispositions of depreciable property; or (4) the treatment of 

depreciable property from a single asset account to a multiple 

asset account (pooling), or vice versa.

• Financial products and/or financial activities of financial 

institutions. Check this box for a change in the treatment of a 

financial product (for example, accounting for debt instruments, 

derivatives, mark-to-market accounting), or in the financial 

activities of a financial institution (for example, a lending 

institution, a regulated investment company, a real estate 

investment trust, or a real estate mortgage investment conduit).

• Other. For non-automatic change requests, check this box if 

neither of the above boxes applies to the requested change. In 

the space provided, enter a short description of the change and 

the most specific applicable Code section(s) for the requested 

change (for example, change within section 263A costs; 

deduction of warranty expenses, section 461; or change to the 

CAUTION

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completed contract method for long-term contracts, section 

460).

For automatic change requests, this informational 

requirement is satisfied by properly completing Part I, line 1, of 

Form 3115.

As noted on Form 3115, the filer must provide all information 

relevant to the requested accounting method change. All 

relevant information includes all information requested on Form 

3115, these instructions, and any other relevant information, 

even if not specifically identified on Form 3115 or in these 

instructions. Table A illustrates, for automatic and non-automatic 

changes, the Parts of Form 3115 that must be completed. Table 

B illustrates the Schedule(s) to be completed for common 

method changes.

Part I—Information for Automatic 

Change Request

Automatic Changes—Scope and Eligibility 

Rules

Line 1a. Enter the DCN on line 1a. These numbers may be 

found in the List of DCNs at the end of the instructions, the List 

of Automatic Changes, or in subsequently published guidance. 

In general, enter a number for only one change. However, the 

numbers for two or more changes may be entered on line 1a if 

specifically permitted in applicable published guidance to file a 

single Form 3115 for particular concurrent accounting method 

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

example, an applicant requesting both a change to deduct repair 

and maintenance costs for tangible property (DCN 184) and a 

Table A: Parts To Complete on Form 3115 for Accounting Method Changes

Information to be completed for automatic and non-automatic change requests

Part I Part II Part III Part IV

Automatic Change X X X

Non-Automatic Change X X X

Table B: Schedules To Complete on Form 3115 for Common Accounting Method Changes

Information to be completed for common method change requests

Common Method 

Changes

Schedule A Schedule B Schedule C Schedule D Schedule E

Part I Part II Part I Part II Part I Part II Part III

Accrual to Cash X X

Cash to Accrual X X**

Capitalize to Expense

Expense to Capitalize X* X*

Depreciation X

Long-Term Contracts X X

Inventory Valuation 

Change

X X*

LIFO Change—Including 

Pooling

X X

Revenue Recognition 

Change for Deferral 

Method for Advance 

Payments, Cost Offset 

Methods, and/or 

Applicable Financial 

Statement Income 

Inclusion Rule

X

X Must fully complete section

Section does not need to be completed.

X* To be completed if applicable—See instructions regarding Schedules D and E, later

X** To be completed if applicable—See instructions regarding Schedule B, later.

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change to capitalize acquisition or production costs (DCN 192) 

may file a single Form 3115 for both changes by including both 

DCNs 184 and 192 on line 1a of Form 3115.

Line 1b. If the accounting method change is not included in the 

List of Automatic Changes or assigned a number in the 

published guidance providing the automatic accounting method 

change, check the box for “Other” on line 1b and identify the 

revenue procedure or other published guidance under which the 

automatic accounting method change is being requested.

Line 2. If “Yes,” provide an explanation as to why the 

applicant(s) qualifies to file under the automatic change 

procedures. If other published guidance provides for an 

automatic accounting method change not listed in the List of 

Automatic Changes, attach a statement citing the guidance. For 

example, for an applicant electing out of certain exemptions from 

securities dealer status to the mark-to-market method under 

section 475, attach a statement citing Rev. Proc. 97-43. If the 

eligibility rules otherwise restrict the applicant from requesting 

the change under the automatic change procedures, but such 

rules are waived for the requested change, then check “No.”

Certain automatic method change requests require 

concurrent method changes to be made in order to 

qualify for the automatic change procedures. For 

example, a taxpayer making a change for accrued bonuses 

under DCN 133 must make the concurrent UNICAP change if 

the taxpayer is subject to section 263A but is not capitalizing the 

accrued bonuses under section 263A.

Generally, an applicant is only eligible to use the automatic 

change procedures of Rev. Proc. 2015-13 if it satisfies the 

following requirements (see section 5.01(1) of Rev. Proc. 

2015-13).

1. On the date the applicant files a Form 3115, the change is 

described in the List of Automatic Changes.

2. On the date the applicant files a Form 3115, the applicant 

meets all requirements for the change provided in the applicable 

section of the List of Automatic Changes.

3. The requested change is not to the principal method 

under Regulations sections 1.381(c)(4)-1(d)(1) or

1.381(c)(5)-1(d)(1).

4. The requested year of change is not the final year of the 

trade or business (but see the instructions for line 4).

5. For an overall method of accounting change, the 

applicant has not made or requested an overall method change 

during any of the 5 tax years ending with the year of change.

6. The applicant has not made or requested a change for 

the same item during any of the 5 tax years ending with the year 

of change, and

7. In the case of a taxpayer that uses the AFS cost offset 

method in Regulations section 1.451-3(c) and/or the advance 

payment cost offset method in Regulations section 1.451-8(e) 

and wants to make a cost-offset related inventory method 

change, as defined in section 5.06 of Rev. Proc. 2015-13, as 

modified by section 4.02 of Rev. Proc. 2021-34, 2021-35 I.R.B. 

337 (that is described in the List of Automatic Changes) the 

taxpayer makes a concurrent change under section 16.10(2)(a)

(iii)(E) and/or section 16.10(2)(a)(iv)(F) or section 16.10(2)(b)(ii)

(E) of Rev. Proc. 2022-14, as applicable.

Note. Some automatic changes in methods of accounting waive 

some of the above requirements. These changes may be found 

in the List of Automatic Changes or the published guidance 

providing the automatic accounting method change.

Line 3. The filer must complete Form 3115, including any 

required statements or attachments. See Table A for the Form 

3115 Part(s) required to be completed for all automatic and 

CAUTION

!

non-automatic change requests. See Table B for a sample of 

common method changes and the Form 3115 Schedule(s) to be 

completed for each. Additionally, see published guidance for any 

additional required information or statements. For example, an 

applicant that wants to use the mark-to-market method of 

accounting under section 475(e) or (f) (DCN 64) must, by the 

due dates provided in section 5.03 of Rev. Proc. 99-17, file a 

statement that satisfies the requirements of section 5.04 of Rev. 

Proc. 99-17.

Part II—Information for All Requests

Line 4. If no, check “No.” If yes, check “Yes” and attach a 

statement explaining why the applicant is eligible to change its 

accounting method. For example, specific guidance may permit 

an applicant to change its method of accounting in its final tax 

year. See section 5.03(2) of Rev. Proc. 2015-13 and sections 

6.01 (DCN 7) and 6.07 (DCN 107) of Rev. Proc. 2022-14, or any 

successor.

Ordinarily, the IRS will not consent to a request for an 

accounting method change when an applicant ceases to engage 

in the trade or business or terminates its existence. Generally, 

an applicant is considered to cease to engage in a trade or 

business if the applicant terminates its existence for federal 

income tax purposes, ceases operation of the trade or business, 

or transfers substantially all the assets of the trade to another 

taxpayer. For example, a cessation of a trade or business occurs 

when a trade or business is incorporated or the assets of the 

trade or business are contributed to a partnership. See sections 

3.04, 5.01, and 5.03 of Rev. Proc. 2015-13.

Line 5. When an acquiring corporation operates the trades or 

businesses of the parties as separate and distinct trades or 

businesses after the date of distribution or transfer, the acquiring 

corporation must use a carryover method. See Regulations 

sections 1.381(c)(4)-1(a)(2) and 1.381(c)(5)-1(a)(2). On the 

other hand, when the acquiring corporation does not operate the 

trades or businesses of the parties as separate and distinct 

trades or businesses after the date of distribution or transfer, the 

acquiring corporation will generally use the principal method. 

The applicant does not need to secure the Commissioner's 

consent to use the principal method. See Regulations sections 

1.381(c)(4)-1(d)(1) and 1.381(c)(5)-1(d)(1).

Line 6a. Generally, the applicant is under examination with 

respect to a federal income tax return as of the date the 

applicant (or filer) is contacted in any manner by a representative 

of the IRS for the purpose of scheduling or conducting any type 

of examination of the return. See section 3.18 of Rev. Proc. 

2015-13.

Line 6b. Generally, the applicant's accounting method is an 

issue under consideration if the examining agent has given the 

applicant (or filer) written notification specifically citing the 

treatment of the item as an issue under consideration. If an 

examining agent does not propose an adjustment for the item 

that is an issue under consideration during the examination, the 

item continues to be an issue under consideration after the 

examination ends only if the issue is placed in suspense. The 

applicant's accounting method is an issue placed in suspense if 

the examining agent has given the applicant (or filer) written 

notification of the IRS's intent to examine the issue during the 

examination of the subsequent tax year(s) to be examined. See 

section 3.08 of Rev. Proc. 2015-13. A partnership or an S 

corporation has an issue under consideration before 

examination if the same item is an issue under consideration in 

an examination of a partner’s, member’s, or shareholder's 

federal income tax return. For consolidated groups, see section 

3.08 of Rev. Proc. 2015-13 for issue under consideration rules.

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For CFCs and 10/50 corporations, the issue under 

consideration rules are different. See section 3.08(4) of 

Rev. Proc. 2015-13.

Lines 6c and 6d. If you answered “Yes” to line 6a, include the 

name and telephone number of the examining agent, and the tax 

year(s) under examination in the designated places on line 6c. 

For any present or former consolidated groups, if there is a tax 

year under examination, complete the information on line 6c. 

Provide a copy of Form 3115 to the examining agent no later 

than the date the filer timely files Form 3115. See section 6.03(3)

(a) of Rev. Proc. 2015-13.

Line 7a. In general, audit protection applies when an 

application for change in accounting method is granted. See 

section 8.01 of Rev. Proc. 2015-13. For exceptions where audit 

protection is not provided, see section 8.02 of Rev. Proc. 

2015-13. You should answer “Yes” even if you do not receive 

audit protection when the change is granted but might receive it 

at the end of the exam under section 8.02(1)(f) of Rev. Proc. 

2015-13. For example, a change made under DCN 17 for an 

applicant that wants to change its treatment of research and 

experimental expenditures does not receive audit protection. 

See the List of Automatic Changes for additional method 

changes not subject to audit protection. If you are making a 

change on behalf of one or more applicants that are CFCs or 

10/50 corporations and audit protection is unavailable for any 

such applicants for one or more years due to the application of 

section 8.02(5) of Rev. Proc. 2015-13, you should check “No” 

and attach an explanation stating the applicants and the years 

for which there is no audit protection under section 8.02(5).

If no audit protection is given for the requested change, check 

“No” and attach an explanation. For example, if you are making a 

change under DCN 17, your explanation is DCN 17. If you are 

making a change under DCN 7, your explanation could be that 

none of the items on line 7b apply. If multiple items are being 

changed on one Form 3115 and at least one item has audit 

protection and another item does not have audit protection, 

check both “Yes” and “No.”

Line 7b. Generally, the applicant receives audit protection for 

tax years prior to the year of change if they fall into one of the 

following categories listed below. If Form 3115 is being filed on 

behalf of multiple applicants or if multiple items are being 

changed on one Form 3115, check all that apply and attach a 

statement identifying which category applies to which applicant 

or item. Except for “Not under exam” and “Other,” the following 

only apply to applicants under examination.

• Not under exam. Check this box if (A) the applicant is not 

under exam, and (B) audit protection applies to the item(s) being 

changed.

• 3-month window. The 3-month window is the period 

beginning on the 15th day of the 7th month following the close of 

the applicant's tax year and ending on the 15th day of the 10th 

month following the close of the applicant's tax year. For 

52-53-week applicants, the tax year begins on the 1st day of the 

calendar month nearest to the 1st day of the 52-53-week tax 

year. See Rev. Proc. 2015-33. For applicants with a short tax 

year ending before the 15th day of the 10th month after the short 

tax year begins, the 3-month window is the period beginning on 

the 1st day of the 2nd month preceding the month in which the 

short tax year ends and ending on the last day of the short tax 

year. An applicant qualifies under the 3-month window period 

when (A) it has been under examination for at least 12 

consecutive months as of the 1st day of the 3-month window, 

and (B) the accounting method for the same item the applicant is 

requesting to change is not an issue under consideration. See 

section 8.02(1)(a) of Rev. Proc. 2015-13. Checking this box 

satisfies the statement requirement of section 8.02(1)(a)(iv) of 

Rev. Proc. 2015-13.

CAUTION

! • 120-day window period. The 120-day window is the 

120-day period following the date an examination of the 

applicant ends, regardless of whether a subsequent examination 

has commenced. An applicant qualifies under the 120-day 

window period if Form 3115 is filed in a 120-day window and the 

accounting method for the same item the applicant is requesting 

to change is not an issue under consideration. See section 

8.02(1)(b) of Rev. Proc. 2015-13. If the applicant checks this 

box, also include the date the examination ended in the 

designated space on line 7b.

• Method not before the director. The present method is not 

before the director when it is (A) a change from a clearly 

permissible method of accounting or (B) a change from an 

impermissible method of accounting and the impermissible 

method was adopted subsequent to the tax year(s) under 

examination on the date the applicant files Form 3115. Checking 

this box satisfies the statement requirement of section 8.02(1)(c)

(ii) of Rev. Proc. 2015-13.

• Change resulting in a negative adjustment. Check this 

box if the change results in a negative adjustment. A negative 

adjustment occurs where an item (A) results in a negative 

section 481(a) adjustment for that item for the year of change, 

and (B) would have resulted in a negative section 481(a) 

adjustment in each tax year under examination if the change in 

accounting method for that item had been made in the tax 

year(s) under examination. Checking this box satisfies the 

statement requirement in section 8.02(1)(e)(iii) of Rev. Proc. 

2015-13.

• CAP. This box applies only to consolidated group members 

participating in the compliance assurance process (CAP). In 

general, audit protection applies to a new member if the new 

member is under audit solely by joining a consolidated group 

that participates in the CAP. See section 8.02(1)(d) of Rev. Proc. 

2015-13. Checking this box satisfies the statement requirement 

of section 8.02(1)(d)(ii) of Rev. Proc. 2015-13. If the applicant 

checks this box, include the date the member joined the 

consolidated group in the designated space on line 7b.

• Other. The List of Automatic Changes or other guidance 

published in the I.R.B. may provide applicants with audit 

protection. For example, specific guidance may provide a filer 

under exam with audit protection. If this box is checked, attach a 

statement citing the guidance providing audit protection.

• Audit protection at end of exam. If the applicant does not 

fall into one of the categories listed above for line 7b, this box 

should generally be checked. The applicant may receive audit 

protection at the end of the examination, provided the examining 

agent does not propose an adjustment for the same item and the 

accounting method for that same item is not an issue under 

consideration. For certain foreign corporations, the applicant 

must satisfy additional requirements in order to receive audit 

protection at the end of the examination. See section 8.02(1)(f) 

of Rev. Proc. 2015-13.

For CFCs and 10/50 corporations, the rules for audit 

protection are different. See section 8.02 of Rev. Proc. 

2015-13 (different rules for the 3-month window, 

120-day window, and audit protection at end of exam).

Line 8a. If you answered “Yes,” complete lines 8b–d.

Line 8b. To determine if the applicant’s accounting method is 

an issue under consideration by Appeals and/or a federal court, 

see sections 3.08(2) and 3.08(3) of Rev. Proc. 2015-13.

Line 8c. If you answered “Yes” to line 8a, include the name and 

telephone number of the Appeals officer(s) and/or counsel to the 

government, as well as the tax year(s) before Appeals and/or 

federal court in the designated places.

Line 8d. If you answered “Yes” for line 8a, provide a copy of the 

signed Form 3115 to the Appeals officer(s) and/or all counsel to 

the government, as applicable, no later than the date the filer 

CAUTION

!

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timely files Form 3115. See section 6.03(3)(a) of Rev. Proc. 

2015-13.

Line 9. If you answered “Yes” to line 6a or 8a, complete line 9. 

The information requested on line 9 should be included on a 

separate attachment.

Line 10. If you answered “Yes,” attach an explanation. Unless 

otherwise provided, the applicant does not receive audit 

protection for the requested change if it is an issue under 

consideration. See sections 3.08 and 8.02(7) of Rev. Proc. 

2015-13.

Lines 11a–c. Unless otherwise provided, an applicant is not 

eligible to file under the automatic change procedures if the 

applicant made or requested a prior overall method change or a 

prior item change (for the same item) within the 5 tax years 

ending with the requested year of change. For additional details, 

see section 9.03(6)(a) of Rev. Proc. 2023-1 and section 11.02(2) 

of Rev. Proc. 2015-13.

Line 12. For further details, see section 9.03(6)(b) of Rev. Proc. 

2022-1.

Line 13. If you answered “Yes,” complete Schedule A of Form 

3115. For example, an overall accounting method change 

includes a change from an accrual method to the cash receipts 

and disbursements method or vice versa. See section 446(c).

Line 14. Provide the information requested on lines 14a–d if the 

applicant answered “No” to question 13 or if the applicant 

answered “Yes” to question 13 and is also changing to a special 

accounting method for one or more items.

With the information requested on line 14b, the applicant is 

also required to provide a statement of whether or not the 

applicant has claimed any federal tax credit, grant, or subsidy 

relating to the item(s) being changed (for example, the employee 

retention credit for a change in method related to payroll taxes). 

A special accounting method for an item is an accounting 

method (other than the cash method or an accrual method) 

expressly permitted by the Code, regulations, or guidance 

published in the I.R.B. that deviates from the rules of sections 

446, 451, and 461 (and the related regulations) that is applicable 

to the applicant's overall accounting method (proposed overall 

method if being changed). For example, the installment 

accounting method under section 453, the mark-to-market 

method under section 475, and the long-term contract method 

under section 460 are special methods of accounting. See 

section 15.01(2)(d) of Rev. Proc. 2022-14.

Lines 15a and 15b. Provide the requested information for each 

applicant. For guidance on using different methods of 

accounting for each trade or business, see section 446(d).

An applicant may include each member of a consolidated 

group, each wholly owned partnership within a consolidated 

group, each separate and distinct trade or business of each 

member of a consolidated group or other entity (even if the 

change is for all of a member's or other entity's trades or 

businesses), and each eligible CFC or 10/50 corporation filing a 

single Form 3115 requesting the identical accounting method 

change. Also see Who Must File, earlier.

Lines 16a–c. For non-automatic changes, the applicant is 

required to provide a full explanation of the legal basis to support 

the proposed method, including all authorities supporting the 

proposed method, and a discussion of all contrary authorities. 

For further details on what is to be included, see Rev. Proc. 

2023-1, sections 7.01(9) (statement of supporting authorities), 

9.03(1) (facts and other information), 9.03(2) (statement of 

contrary authorities), 9.03(4) (analysis of material facts), and 

9.03(7) (statement identifying pending legislation).

For the following automatic method changes, the applicant is 

only required to complete lines 16a–b, unless the information on 

lines 16a–b is otherwise provided in the applicable Form 3115 

Schedules A–E: DCNs 6, 7, 28, 54, 55, 64, 65, 108, 111, 114, 

127, 194, and 200 (only for changes listed in sections 6.12(3)(a)

(ix), 6.12(3)(a)(x), and 6.12(3)(b)(viii) in the List of Automatic 

Changes; 205 (only for changes listed in sections 6.13(3)(h) and 

6.13(3)(j) in the List of Automatic Changes); 206 (only for 

changes listed in sections 6.14(3)(a), 6.14(3)(h), and 6.14(3)(j) 

in the List of Automatic Changes; 207 (only for changes listed in 

sections 6.15(3)(a) and 6.15(3)(d) in the List of Automatic 

Changes); 211, 218, 231, 237, 241, 242, 250, 251, 252, 253, 

254, 255, and 256. Line 16c does not need to be completed for 

applicants filing automatic method changes. For further details 

on what is to be included, see Rev. Proc. 2023-1, sections 

7.01(9) (statement of supporting authorities), 9.03(1) (facts and 

other information), and 9.03(4) (analysis of material facts).

If the automatic DCN is not specifically listed in the paragraph 

above, or subsequent guidance released after the issuance of 

these instructions, skip lines 16a–c.

Line 17. Insurance companies must also attach a statement 

indicating whether the proposed accounting method will be used 

for annual statement accounting purposes.

Line 18. For details on requesting and scheduling a 

conference, see sections 9.04(4) and 10 of Rev. Proc. 2023-1.

Lines 19a and 19b. For certain automatic method changes, the 

applicant must demonstrate that it meets the gross receipts test 

under section 448(c) to qualify for the change. This gross 

receipts test is met if a taxpayer has average annual gross 

receipts for the 3 prior tax years at or below the inflation-adjusted 

amount. See Useful Items earlier, for guidance on the 

inflation-adjusted amounts.

For the calculation of gross receipts for an overall accounting 

method change request, whether an applicant qualifies as a 

small business taxpayer for purposes of applying sections 263A 

and 471, or whether an applicant qualifies as an eligible small 

business under section 474(c), see section 448(c) and 

Regulations section 1.448-2(c), and, as applicable, Regulations 

section 1.263A-1(b)(1)(j) or Regulations section 1.471-1(a)(2).

For the calculation of gross receipts for determining whether 

the applicant has an exempt construction contract under 

Regulations section 1.460-3(b), for contracts entered into after 

December 31, 2017, in tax years ending after December 31, 

2017, see section 448(c) and Regulations sections 1.448-2(c) 

and 1.460-3(b)(3).

Part III—Information for 

Non-Automatic Change Request

Non-automatic change—scope and eligibility rules. An 

applicant may not use the non-automatic change procedures if 

any of the following eligibility limitations apply at the time Form 

3115 is filed with the IRS National Office.

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

according to a published automatic change procedure, such as 

Rev. Proc. 2022-14.

2. The requested year of change is the final year of the trade 

or business, unless (a) the change is a result of a transaction to 

which section 381(a) applies; or (b) the applicant demonstrates 

to the satisfaction of the IRS National Office compelling 

circumstances, or that it is in the interest of sound tax 

administration for the applicant to change in its final year.

Line 20. If you answered “Yes,” attach an explanation 

describing why the applicant is not eligible to file a request under 

the automatic change procedures.

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Line 21. Attach true copies of all contracts, agreements, and 

other documents directly related to the proposed accounting 

method change. See section 9.03(3) of Rev. Proc. 2023-1.

Line 22. Include a statement explaining the reason for the 

proposed change. See sections 7.01(1)(d) and 9.03(1) of Rev. 

Proc. 2023-1.

Line 23. If you answered “No” to line 23, a common parent 

requesting an accounting method change on behalf of a member 

of the consolidated group must attach a statement explaining the 

accounting method used by each member of the consolidated 

group for the particular item that is the subject of the method 

change request. See section 6.02(5) of Rev. Proc. 2015-13.

Lines 24a and 24b. For non-automatic change requests, you 

must pay a user fee for each applicant. Where the filer is not an 

applicant, a fee is not required for the filer. See section 15 and 

Appendix A of Rev. Proc. 2023-1 for information regarding user 

fees, including reduced user fees and user fees for additional 

applicants filing identical changes in methods of accounting.

Pay the user fees through PAY.gov.

Note. Filers filing under the automatic change procedures do 

not pay a user fee.

Example 1. Filer is the common parent of a consolidated 

group of corporations. Filer files a single Form 3115 on behalf of 

itself and two other members of the consolidated group for an 

identical accounting method change. There are three applicants 

(Filer and the two other members of the consolidated group). 

Therefore, for a non-automatic change request, all three 

applicants are required to pay a user fee. The filer applicant 

must submit the regular user fee under section (A)(3)(b)(i) of 

Appendix A of Rev. Proc. 2023-1 (or a reduced fee per section 

(A)(4) of Appendix A of Rev. Proc. 2023-1, if applicable), and the 

two other applicants qualify for the reduced user fee under 

section (A)(5)(b) of Appendix A of Rev. Proc. 2023-1.

Example 2. Filer is the common parent of a consolidated 

group of corporations. Filer is filing a single Form 3115 on behalf 

of two other members of the consolidated group for an identical 

accounting method change. There are two applicants on Form 

3115 (the two members of the consolidated group). Filer is not 

changing its accounting method and, therefore, does not pay a 

fee on account of itself. For a non-automatic change request, 

both applicants are required to pay a user fee. One applicant 

must submit the regular user fee under section (A)(3)(b)(i) of 

Appendix A of Rev. Proc. 2023-1 (or a reduced fee per section 

(A)(4) of Appendix A of Rev. Proc. 2023-1, if applicable), and the 

other applicant qualifies for the reduced user fee under section 

(A)(5)(b) of Appendix A of Rev. Proc. 2023-1. This example 

applies similarly to a filer that is the common sponsor of multiple 

entities.

Example 3. Filer, a single taxpayer, files Form 3115 on 

behalf of its three separate and distinct trades or businesses. 

The request is for an identical accounting method change. 

Notwithstanding that Filer is a single taxpayer, there are three 

applicants on Form 3115. For a non-automatic change request, 

all three applicants are required to pay a user fee. One applicant 

must submit the regular user fee under section (A)(3)(b)(i) of 

Appendix A of Rev. Proc. 2023-1 (or a reduced fee per section 

(A)(4) of Appendix A of Rev. Proc. 2023-1, if applicable), and the 

other two applicants qualify for the reduced user fee under 

section (A)(5)(b) of Appendix A of Rev. Proc. 2023-1.

Part IV—Section 481(a) Adjustment

Line 25. Ordinarily, an adjustment under section 481(a) is 

required for accounting method changes. The section 481(a) 

adjustment period is generally 1 tax year (year of change) for a 

negative section 481(a) adjustment and 4 tax years (year of 

change and next 3 tax years) for a positive section 481(a) 

adjustment. However, when an applicant is under examination, 

the section 481(a) adjustment period is 2 tax years (year of 

change and next tax year) for a positive section 481(a) 

adjustment for a requested accounting method change unless 

one of the following categories described on line 7b applies: 

3-month window, 120-day window period, method not before the 

director, or CAP.

For some accounting method changes, there may be special 

rules relating to the section 481(a) adjustment period. See, for 

example, section 16.10(4)(b)(iv)(D) of Rev. Proc. 2022-14 

pertaining to certain section 451 cost offset accounting method 

changes resulting from concurrent cost-offset related inventory 

method changes.

Also, for certain accounting method changes, the applicant 

must make the change on a cut-off basis or modified cut-off 

basis. See, for example, Regulations section 1.446-1(e)(2)(ii)(d)

(5)(iii). In those cases, there is no section 481(a) adjustment. 

Under a cut-off basis, only the items arising on or after the 

beginning of the year of change are accounted for under the new 

method of accounting. Any items arising before the year of 

change continue to be accounted for under the applicant's 

former accounting method.

For a change in accounting method for accruing a foreign 

income tax expense, do not compute a section 481(a) 

adjustment. Instead, apply the modified cut-off rules in 

Regulations section 1.905-1(d)(5). Attach a statement showing, 

for each separate statutory or residual grouping, the upward and 

downward adjustment (accounted for in the currency in which 

the foreign tax liability is denominated) that is required by 

Regulations section 1.905-1(d)(5)(ii). Provide a separate upward 

and downward adjustment for foreign income taxes for which the 

foreign tax credit is disallowed and to which section 275(a)(4) 

does not apply. See Regulations section 1.905-1(d)(5) and the 

examples in Regulations section 1.905-1(d)(6) for additional 

information.

If multiple items are being changed on one Form 3115 and at 

least one item is changed on a cut-off basis or modified cut-off 

basis and another item is changed with a section 481(a) 

adjustment, check both “Yes” and “No” and attach a statement 

identifying which item(s) is being made on a cut-off basis or 

modified cut-off basis.

An eligible terminated S corporation (as defined in section 

481(d)(2)) that is required to change an accounting method as a 

result of a revocation of its S corporation election must take into 

account the resulting positive or negative section 481(a) 

adjustment ratably during the 6-year period beginning with the 

year of change. In addition, an eligible terminated S corporation 

that is permitted to continue to use the cash method after the 

revocation of its S corporation election and that changes to an 

overall accrual method for the C corporation’s first tax year after 

such revocation may take into account the resulting positive or 

negative adjustment required by section 481(a)(2) ratably during 

the 6-year period beginning with the year of change. See Rev. 

Proc. 2018-44, 2018-37 I.R.B. 426. Section 481(d)(2) defines an 

eligible terminated S corporation as any C corporation that (1) 

was an S corporation on December 21, 2017; (2) revokes its S 

corporation election after December 21, 2017, but before 

December 22, 2019; and (3) has the same owners of stock in 

identical proportions on December 22, 2017, and the revocation 

date.

If the accounting method change is an automatic change in 

functional currency under section 985 (see section 29.01 of Rev. 

Proc. 2022-14), the adjustments required under Regulations 

section 1.985-5 must be made on the last day of the tax year 

ending before the year of change. Any gain or loss that must be 

recognized under Regulations section 1.985-5 is included in 

income or earning and profits on the last day of the tax year 

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ending before the year of change, and is not subject to section 

481. Attach a statement showing the adjustment required under 

Regulations section 1.985-5. The statement should include the 

amount of the adjustment required pursuant to Regulations 

section 1.985-5, a summary of the computation of such 

adjustment, and an explanation of any other adjustments 

required by Regulations section 1.985-5.

Except if instructed differently, you must attach a statement 

showing the (net) section 481(a) adjustment for each change in 

method for each applicant included on Form 3115. Include a 

summary of how the (net) section 481(a) adjustment was 

computed and an explanation of the methodology used to 

determine it. The summary of computation and explanation must 

be sufficient to demonstrate that the (net) section 481(a) 

adjustment is computed correctly. If the applicant is a CFC or 

10/50 corporation, or a trade or business of a CFC or 10/50 

corporation, and its functional currency is not the U.S. dollar, 

state the (net) section 481(a) adjustment in that functional 

currency. The statement may be combined with the information 

requested on the fourth line on page 1 (list the applicants and 

their identification numbers) and on line 24 (user fee).

Section 481(a) adjustments (or components of section 

481(a) adjustments) from changes under DCN 248 

included in the same Form 3115 must be stated in 

accordance with section 6.22(8) of Rev. Proc. 2022-14.

Example 1. Under its present method, XYZ Corporation is 

deducting certain costs that are required to be capitalized into 

inventory under section 263A. XYZ Corporation is proposing to 

change its account method to properly capitalize such costs. 

The computation of the section 481(a) adjustment with respect 

to the accounting method change is demonstrated as follows.

Beginning inventory for year of change under 

proposed method ................. $120,000

Beginning inventory for year of change under present 

method ....................... $100,000

Section 481(a) adjustment .............. +$20,000

Example 2. WXY Corporation, a calendar year taxpayer, is a 

producer and capitalizes costs that are required to be capitalized 

into inventory under section 263A. Each February, WXY 

Corporation pays a salary bonus to each employee who remains 

in its employment as of January 31 for the employee's services 

provided in the prior calendar year. Under its present method, 

WXY Corporation treats these salary bonuses as incurred in the 

tax year the employee provides the related services. For 2022, 

WXY Corporation proposes to change its accounting method to 

treat salary bonuses as incurred in the tax year in which all 

events have occurred that establish the fact of the liability to pay 

the salary bonuses and the amount of the liability can be 

determined with reasonable accuracy, pursuant to section 

20.01(2) of Rev. Proc. 2022-14. The computation of WXY 

Corporation's net section 481(a) adjustment for the change in 

accounting method for salary bonuses is demonstrated as 

follows.

CAUTION

!

Salary bonuses treated as incurred 

under the present method, but not 

incurred under the proposed 

method ................ $40,000

Beginning inventory as of January. 1, 

2022, with capitalized salary bonuses 

computed under the present 

method ................ $100,000

Beginning inventory as of January. 1, 

2022, with capitalized salary bonuses, 

computed under the proposed 

method ................ $92,000

Decrease in beginning inventory as of 

January. 1, 2022 ...........

($8,000)

Net section 481(a) adjustment .... +$32,000

Line 26. In computing the net section 481(a) adjustment, an 

applicant must take into account all relevant accounts. For some 

changes (for example, a change that affects multiple accounts), 

the section 481(a) adjustment is a net section 481(a) 

adjustment. See Example 2 above and the example under 

Schedule A, Part l, line 2h, later. If there is more than one 

method change requested, the section 481(a) adjustment is 

generally separately stated for each method change. However, 

some changes may require the netting of section 481(a) 

adjustments with those for certain other method changes made 

during the same year of change. See, for example, certain 

changes under section 16.10 of Rev. Proc. 2022-14.

If an election has been made under Regulations section 

1.59A-3(c)(6)(i) to waive an allowed deduction for purposes of 

determining the section 59A base erosion and anti-abuse tax, 

and the method of accounting for the waived deduction is being 

changed, the amount of the net section 481(a) adjustment is 

determined without regard to the waived deduction. See 

Regulations section 1.59A-3(c)(6)(iii)(D). As a result, a waived 

deduction has no effect on the calculation of the amount of a 

section 481(a) adjustment. For an example illustrating how to 

calculate a section 481(a) adjustment with respect to a method 

of accounting for which an applicant has waived deductions, see 

Regulations 1.59A-3(d)(9) (Example 9).

Line 27. Certain automatic method changes require an 

applicant with a section 481(a) adjustment remaining on a prior 

change in accounting method to take the remaining portion of 

the prior section 481(a) adjustment into account in the year of 

change. See, for example, DCNs 234 and 262. If applicable, 

enter the amount of the remaining portion of the section 481(a) 

adjustment from the prior change.

Line 28. An applicant may elect a 1-year section 481(a) 

adjustment period for a positive section 481(a) adjustment that is 

less than $50,000. See section 7.03(3)(c) of Rev. Proc. 2015-13. 

An applicant may also elect a 1-year section 481(a) adjustment 

period for all positive section 481(a) adjustments for the year of 

change if an eligible acquisition transaction occurs during the 

year of change or in the subsequent tax year on or before the 

due date for filing the applicant's federal tax return for the year of 

change. For more details about the eligible acquisition 

transaction election, see section 7.03(3)(d) of Rev. Proc. 

2015-13.

Line 29. If “Yes,” explain the nature and amount of the section 

481 adjustment attributable to the intercompany transaction(s).

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Schedule A—Change in Overall 

Method of Accounting

Part I—Change in Overall Method

All applicants filing to change their overall accounting method 

must complete Schedule A, Part I, including applicants filing 

under DCNs 122, 126, 127, 128, 233, 257, 258, and 259 in the 

List of Automatic Changes.

Lines 2a–g. Enter the amounts requested on lines 2a through 

2g, even though the calculation of some amounts may not have 

been required in determining taxable income due to the 

applicant's present accounting method. Applicants with an 

applicable financial statement changing to an accrual method 

and entering an amount on line 2a should complete Schedule B 

if the income is subject to section 451(b).

Note. Do not include amounts that are not attributable to the 

accounting method change, such as amounts that correct a 

math or posting error or errors in calculating tax liability. In 

addition, for a bank changing to an overall cash/hybrid method of 

accounting, do not include any amounts attributable to a special 

method of accounting. See DCN 127.

Line 2b. Enter amounts received or reported as income in a 

prior year that were not earned as of the beginning of the year of 

change. For example, an advance payment received in a prior 

year for goods that were not delivered by the beginning of the 

year of change may be reported in the subsequent year if the 

applicant qualifies under Regulations section 1.451-8(c) or (d), 

as applicable. If any amounts entered on line 2b are for advance 

payments, complete Schedule B.

Line 2h. Enter the net amount, which is the net section 481(a) 

adjustment, on line 2h. Also, enter the net section 481(a) 

adjustment on Part IV, line 26. See the instructions for Part IV, 

line 26, earlier.

The following example illustrates how an applicant calculates 

the section 481(a) adjustment when changing to an accrual 

method, a nonaccrual-experience method, and the recurring 

item exception.

Example. ABC Corporation, a calendar year taxpayer using 

the cash method of accounting, has the following items of 

unreported income and expense on December 31, 2021.

Accrued income ...................... $250,000

Uncollectible amounts based on

the nonaccrual-experience method ......... 50,000

Accrued amounts properly deductible

(economic performance has occurred) ....... 75,000

Expenses eligible for recurring item 

exception ......................... 5,000

ABC Corporation changes to an overall accrual method, a 

nonaccrual-experience method, and the recurring item 

exception for calendar year 2022. The section 481(a) adjustment 

is calculated as of January 1, 2022, as follows.

Accrued income (line 2a) ............ $250,000

Less:

Uncollectible amount .............. (50,000)

Net income accrued but not received .... $200,000

Less:

Accrued expenses (line 2c) .......... (75,000)

Expenses deducted as recurring item 

(line 2g) .....................

(5,000)

Total expenses accrued but not paid ..... (80,000)

Section 481(a) adjustment ............ +$120,000

Line 3. Check “Yes” if the applicant is requesting to use the 

recurring item exception (section 461(h)(3)). The section 481(a) 

adjustment must include the amount of the additional deduction 

that results from using the recurring item exception.

Line 5. Check "Yes" if the applicant is requesting a change to 

the overall cash method or to a method in which a 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 under section 15.17 of Rev. Proc. 2022-14 (DCNs 

233 and 259). See section 15.17(5)(a) of Rev. Proc. 2022-14 to 

determine whether an applicant qualifies as a small business 

taxpayer.

Part II—Change to the Cash Method for 

Non-Automatic Change Request

Limits on cash method use. Except as provided below, C 

corporations and partnerships with a C corporation as a partner 

may not use the cash method. Tax shelters are also precluded 

from using the cash method. For this purpose, a trust subject to 

tax on unrelated business income under section 511(b) is 

treated as a C corporation with respect to its unrelated trade or 

business activities.

The limit on the use of the cash method under section 448 

does not apply to the following.

1. Farming businesses as defined in section 448(d)(1).

2. Qualified personal service corporations as defined in 

section 448(d)(2).

3. C corporations and partnerships with a C corporation as a 

partner that meets the section 448(c) gross receipts test for the 

tax year. The gross receipts test is met if a taxpayer has average 

annual gross receipts for the 3 prior tax years at or below the 

inflation-adjusted amount. See Useful Items, earlier, for 

guidance on the inflation-adjusted amount for the applicable tax 

year. Also, see section 448(c) and Regulations section 

1.448-2(c) to determine if the applicant qualifies for this 

exception.

For farming corporations and partnerships with a C 

corporation as a partner, see section 447 for limits on the use of 

the cash method.

Use of the cash method is also limited for a taxpayer that is 

required to maintain an inventory because the production, 

purchase, or sale of merchandise is an income-producing factor. 

However, see sections 448(c) and 471(c), and sections 15, 17 

(DCNs 233 and 259), and 22.18 of Rev. Proc. 2022-14 (DCN 

235) for an exception to this requirement for small business 

taxpayers with average annual gross receipts that meet the 

gross receipts test.

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Schedule B—Changes Related to the 

Deferral Method for Advance 

Payments, Cost Offset Methods, 

and/or the Applicable Financial 

Statement Income Inclusion Rule

Line 1. The deferral method for advance payments. In 

general, advance payments must be included in gross income in 

the tax year of receipt for federal income tax purposes. However, 

under Regulations section 1.451-8(c) or (d), an applicant may 

defer the inclusion in income of certain advance payments (or a 

portion thereof), as defined in Regulations section 1.451-8(a)(1), 

to the next tax year. If the applicant is also using the advance 

payment cost offset method, the portion of any advance 

payment to which the cost offset applies is deferred to the tax 

year in which ownership of the good is transferred to the 

customer. Under the cost offset method, only the portion of the 

payment in excess of costs incurred is recognized by the year 

following the year of receipt.

Applicants with or without an applicable financial statement 

(AFS), as defined in Regulations section 1.451-3(a)(5), may be 

eligible to use a deferral method for advance payments. See 

section 451(c), Regulations section 1.451-8, and section 16.10 

of Rev. Proc. 2022-14 for more information about the deferral 

method for advance payments.

Some applicants requesting to change to the deferral method 

must file under the non-automatic change procedures of Rev. 

Proc. 2015-13. See section 16.10(3) of Rev. Proc. 2022-14. All 

other applicants must generally file under the automatic change 

procedures of Rev. Proc. 2015-13.

If the applicant is requesting to change to the deferral method 

for advance payments described in Regulations section 

1.451-8(c) or (d), attach a detailed description of the present and 

proposed methods including the following information.

1. Explain how the payments meet the definition of an 

advance payment as defined in Regulations section 1.451-8(a)

(1).

2. Does the applicant have an AFS as defined in 

Regulations section 1.451-3(a)(5)? If so, identify the type of 

AFS.

3. For applicants with an AFS. Describe the advance 

payment allocation method if there is more than one 

performance obligation as defined in Regulations section 

1.451-3(a)(11).

For applicants without an AFS. If the applicant receives an 

advance payment that is attributable to one or more items 

described in Regulations section 1.451-8(a)(1)(i)(C), describe 

the objective criteria on which the applicant's method is based. 

For example, the allocation method may be based on payments 

the applicant receives for an item or items it regularly sells or 

provides separately.

4. For applicants with an AFS. Under the proposed method, 

if the applicant is required to adjust AFS revenue in accordance 

with Regulations section 1.451-8(c)(2), describe the specific 

adjustments used to arrive at the amount taken into account as 

AFS revenue.

Applicants filing under the non-automatic change procedures 

of Rev. Proc. 2015-13 should include all information requested in 

the instructions for Schedule B, line 1, and see Rev. Proc. 

2015-13 and Non-automatic change scope and eligibility rules 

under Part III, earlier, for additional requirements.

Line 2. Cost offset methods. Regulations section 1.451-3(c) 

allows taxpayers to use a cost offset accounting method to 

determine the AFS income inclusion amount from the sale of 

inventory (AFS cost offset method). See Regulations section 

1.451-3(c) for the rules relating to the AFS cost offset method. 

Applicants using this method for a trade or business that have 

advance payments for the sale of inventory must also use the 

advance payment cost offset method described in Regulations 

section 1.451-8(e). If an applicant chooses to use the AFS cost 

offset method and/or the advance payment cost offset method, 

as applicable, it must use such method(s) for all items of gross 

income in the trade or business that meet the criteria set forth in 

Regulations sections 1.451-3(c) and 1.451-8(e), as applicable. 

Under the AFS cost offset method and the advance payment 

cost offset method, the cost of goods in progress offset must be 

determined separately for each item of inventory. Under some 

circumstances, an applicant without an AFS may use the 

advance payment cost offset method in Regulations section 

1.451-8(e). See DCN 253 in section 16.10 of Rev. Proc. 

2022-14. Applicants changing to or within a cost offset method 

may be required to make concurrent accounting method 

changes, including cost-offset related inventory changes, as 

defined in section 5.06 of Rev. Proc. 2015-13, as modified by 

section 4.02 of Rev. Proc. 2021-34. See DCN 255 in section 

16.10 of Rev. Proc. 2022-14.

If the applicant is requesting to change to or within a cost 

offset method, attach a detailed description of the present and 

proposed methods including the following information.

1. Does the applicant have an AFS as defined in 

Regulations section 1.451-3(a)(5)? If so, identify the type of 

AFS.

2. Describe any other concurrent proposed cost-offset 

related inventory method changes and describe the order in 

which the concurrent changes are being implemented. See 

section 16.10 of Rev. Proc. 2022-14.

3. Provide a general description of the items of inventory to 

which the change applies.

4. Describe how the applicant determines the cost of goods 

allocable to each respective item of inventory as required by 

Regulations section 1.451-3(c)(3) or Regulations section 

1.451-8(e)(4), as applicable.

Line 3. Methods to conform to the AFS income inclusion 

rule. Generally, for an accrual method taxpayer, the all events 

test under Regulations section 1.451-1(a) for an item of gross 

income, or portion thereof, is met no later than when that item, or 

portion thereof, is taken into account as AFS revenue (AFS 

income inclusion rule). The AFS income inclusion rule does not 

apply to taxpayers that do not have an AFS, as defined in 

Regulations section 1.451-3(a)(5), for a tax year. See section 

451(b), Regulations section 1.451-3, and DCN 250 in section 

16.10 of Rev. Proc. 2022-14 for additional information about 

methods to conform to the AFS income inclusion rule.

If the applicant is requesting to change to or within a method 

to conform to the AFS income inclusion rule under section 

451(b) and Regulations section 1.451-3, attach a detailed 

description of the present and proposed methods including the 

following information:

1. Identify the type of AFS that is used for purposes of the 

AFS income inclusion rule.

2. If the taxpayer is required to allocate transaction price to 

multiple items of gross income in accordance with Regulations 

section 1.451-3(d), including any item(s) of gross income that is 

accounted for under a special method of accounting, describe 

the present and proposed allocation method.

3. Under the proposed method, if the applicant is required to 

adjust AFS revenue in accordance with Regulations section 

1.451-3(b)(2), describe the specific adjustments used to arrive at 

the amount taken into account as AFS revenue.

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4. If under the applicant's proposed method of accounting, 

AFS revenue is reduced in accordance with the enforceable 

right rules in Regulations section 1.451-3(b)(2)(i)(B), describe 

why the applicant does not have an enforceable right to the 

reduction amount.

Schedule C—Changes Within the 

LIFO Inventory Method

Use this schedule to request a change from one LIFO inventory 

method or submethod to another LIFO inventory method or 

submethod. All applicants changing within the LIFO inventory 

method or submethods must complete Part I. Complete Part II 

only if applicable.

Part I—General LIFO Information

Line 6. Applicants changing to the inventory price index 

computation (IPIC) method must use this method for all LIFO 

inventories. This requirement includes applicants requesting 

DCN 61 or 62 in the List of DCNs, later.

Schedule D—Change in the 

Treatment of Long-Term Contracts 

Under Section 460, Inventories, or 

Other Section 263A Assets

Part I—Change in Reporting Income From 

Long-Term Contracts

Line 2a. Under section 460(f), the term “long-term contract” 

means any contract for the manufacture, building, installation, or 

construction of property that is not completed in the tax year in 

which it is entered into. However, a manufacturing contract will 

not qualify as long term unless the contract involves the 

manufacture of (a) a unique item not normally included in 

finished goods inventory, or (b) any item that normally requires 

more than 12 calendar months to complete.

Long-term contracts that do not meet the exceptions under 

section 460(e) must be accounted for using the percentage of 

completion method. See section 460 and the related regulations.

Line 2b. To qualify for the exceptions under section 460(e), the 

contract must be:

1. A home construction contract as defined in section 460(e)

(5)(A), or

2. Any other construction contract entered into by the 

applicant if, at the time the contract is entered into, it is expected 

to be completed within 2 years and the applicant's average 

annual gross receipts for the 3-year period preceding the tax 

year the contract was entered into do not exceed the 

inflation-adjusted amount. See Useful items, earlier.

Line 2d. Under the simplified cost-to-cost method, only certain 

costs are used in determining both (a) costs allocated to the 

contract and incurred before the close of the tax year, and

(b) estimated contract costs. These costs are (1) direct material 

costs; (2) direct labor costs; and (3) allowable deductions for 

depreciation, amortization, and cost recovery allowances on 

equipment and facilities directly used to construct or produce the 

subject matter of the long-term contract. See Regulations 

section 1.460-5(c).

Part II—Change in Valuing Inventories Including 

Cost Allocation Changes

If the applicant is currently using a LIFO inventory method or 

submethod and is changing to another LIFO inventory method or 

submethod, Schedule D, Part II, is not applicable. Use 

Schedule C, Changes Within the LIFO Inventory Method.

Line 3. If an applicant is subject to, but not in compliance with, 

section 263A, generally on the same Form 3115 the applicant 

must first comply with section 263A before changing an 

inventory valuation method. The applicant must complete 

Schedule D, Part III, Method of Cost Allocation. For exceptions, 

see Regulations section 1.263A-7(b)(2).

Line 5a. If the applicant properly elected the LIFO inventory 

method but is unable to furnish a copy of Form(s) 970, 

Application to Use a LIFO Inventory Method, attach the following 

statement to Form 3115.

“I certify that to the best of my knowledge and belief [name of 

applicant] properly elected the LIFO inventory method by filing 

Form 970 with its return for the tax year(s) ended [insert date(s)] 

and otherwise complied with the provisions of section 472(d) 

and Regulations section 1.472-3.”

Line 5c. Attach the two statements required by section 23.01(5) 

of Rev. Proc. 2022-14.

Line 6 Applicants requesting to make a cost-offset related 

inventory method change, as defined in section 5.06 of Rev. 

Proc. 2015-13, as modified by section 4.02 of Rev. Proc. 

2021-34, may also be required to make concurrent cost offset 

changes under Regulations sections 1.451-3 and/or 1.451-8. 

See the changes under DCN 255 in section 16.10 of Rev. Proc. 

2022-14. Applicants making concurrent cost offset changes 

under Regulations sections 1.451-3 and/or 1.451-8 should also 

complete Schedule B, line 2. Concurrent changes may need to 

be implemented in a particular order, and special eligibility rules 

regarding section 481(a) adjustments may apply. See section 

16.10 of Rev. Proc. 2022-14 and section 5.01(1)(g) of Rev. Proc. 

2015-13, as modified by section 4.01 of Rev. Proc. 2021-34.

Part III—Method of Cost Allocation

Applicants requesting to change their accounting method for any 

property (produced or acquired for resale) subject to section 

263A or any long-term contracts as described in section 460 

must complete this schedule.

If the change is for noninventory property that is subject to 

section 263A, attach a detailed description of the types of 

property involved.

There are several methods available for allocating and 

capitalizing costs under section 263A, and for allocating costs to 

long-term contracts. A change to or from any of these methods is 

a change in accounting method that requires IRS consent. Using 

the applicable regulations and notice listed below, the applicant 

should verify which methods are presently being used and the 

proposed methods that will be used before completing 

Schedule D, Part III. These methods are as follows.

1. Allocating Direct and Indirect Costs

• Specific identification method—Regulations sections 

1.263A-1(f)(2) and 1.460-5.

• Burden rate method—Regulations sections 1.263A-1(f)(3)(i) 

and 1.460-5.

• Standard cost method—Regulations sections 1.263A-1(f)(3)

(ii) and 1.460-5.

• Any other reasonable allocation method—Regulations 

sections 1.263A-1(f)(4) and 1.460-5.

2. Allocating Mixed Service Costs

• Direct reallocation method—Regulations section 1.263A-1(g)

(4)(iii)(A).

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• Step-allocation method—Regulations section 1.263A-1(g)(4)

(iii)(B).

• Simplified service cost method:

—Using the labor-based allocation ratio—Regulations 

section 1.263A-1(h)(4).

—Using the production cost allocation ratio—Regulations 

section 1.263A-1(h)(5).

• Any other reasonable allocation method—Regulations section 

1.263A-1(f)(4).

3. Capitalizing Additional Section 263A Costs

• Simplified production method:

—Without historic absorption ratio election—Regulations 

section 1.263A-2(b)(3).

—With historic absorption ratio election—Regulations 

section 1.263A-2(b)(4).

• Modified simplified production method:

—Without historic absorption ratio election—Regulations 

section 1.263A-2(c)(3).

—With historic absorption ratio election—Regulations 

section 1.263A-2(c)(4).

• Simplified resale method:

—Without historic absorption ratio election—Regulations 

section 1.263A-3(d)(3).

—With historic absorption ratio election—Regulations 

section 1.263A-3(d)(4).

• U.S. ratio method—Notice 88-104, 1988-2 C.B. 443.

• Any other reasonable allocation method—Regulations section 

1.263A-1(f)(4) (including the methods listed above under 

Allocating Direct and Indirect Costs).

Schedule E—Change in Depreciation 

or Amortization

All applicants requesting to change their accounting method for 

depreciation or amortization must complete Schedule E of Form 

3115. Attach a statement describing the property subject to the 

change. Include the property description, type, placed-in-service 

year, and use in the applicant's trade or business or 

income-producing activity, and include the type and amount of 

any tax credit claimed, subsidy, or grant received, along with any 

necessary adjustments to basis required under the Code, with 

respect to the property. The statement should include a 

description of the incentive received with respect to the property 

subject to the change, including whether the type of incentive is 

a tax credit, subsidy, grant, or other incentive and whether the 

incentive is funded by the federal government, a state or local 

government, or an agency or instrumentality thereof. Applicants 

changing their accounting method for depreciation or 

amortization under the automatic change procedures should see 

the depreciation changes in the List of DCNs below.

Do not file Form 3115:

1. To make an election under section 167, 168, 179, 197, or 

former section 1400I;

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

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

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

section 197 intangibles);

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

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

salvage value to zero when the salvage value is expressly 

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

guidance); or

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

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

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

or other published guidance).

List of DCNs

Summary of Automatic Accounting Method 

Changes

This list includes regulatory automatic changes, changes 

provided for in Rev. Proc. 2022-14, and automatic changes 

provided for in other guidance. These automatic changes may 

be modified or supplemented with additional automatic changes 

by subsequently published guidance.

This list provides a brief description of the automatic changes 

in method of accounting made using Form 3115. A filer/applicant 

may not rely on the list or the descriptions of accounting method 

changes in the list as authority for making an accounting method 

change. A filer/applicant that is within the scope of, and complies 

with, all the applicable provisions of the published guidance that 

authorizes each listed change may rely on the applicable 

published guidance as authority for its automatic accounting 

method change. If any information in the list conflicts with 

published guidance, the published guidance applies. Each 

automatic method change described in Rev. Proc. 2022-14, as 

modified, contains a contact person you may call if you need 

additional information concerning the change (not a toll-free 

number).

Each item in the list below:

• Designates an automatic accounting method change number 

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

• Briefly describes the accounting method change and its 

primary Code section(s);

• Indicates in some cases which schedules of Form 3115 to 

complete; and

• Provides a reference to the basic published guidance (for 

example, revenue procedure) that provides for the automatic 

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

Information for Automatic Change Request, on page 1 of Form 

3115.

Note. Certain retired or obsolete numbers in the List of DCNs 

have not been replaced in order to maintain continuity for the 

active DCNs.

In the event the underlying authority for any of the DCNs 

becomes obsolete or is superseded, then a change can 

CAUTION

no longer be made under such DCN.

!

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List of DCNs

No. Change

1 Commodity Credit Corporation loans (section 77)—for loans received from the Commodity Credit Corporation, from

including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. 

See section 2.01 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis.

2 Advances made by a lawyer on behalf of clients (section 162)—from treating advances of money to or on behalf of their 

clients for litigation or other client expenses as deductible expenses to treating those advances as a loan. See section 3.01 of 

Rev. Proc. 2022-14.

3 ISO 9000 costs (section 162)—to treating the costs as deductible, except to the extent they result in the creation or 

acquisition of an asset having a useful life substantially beyond the tax year. See section 3.02 of Rev. Proc. 2022-14.

4 Restaurant smallwares costs (section 162)—to the smallwares method described in Rev. Proc. 2002-12, 2002-1 C.B. 374 

(that is, as materials and supplies that are not incidental under Regulations section 1.162-3). See section 3.03 of Rev. Proc. 

2022-14.

5 Bad debts (section 166)—for an applicant other than a bank, from accounting for bad debts using a reserve or other improper 

method to a specific charge-off method that complies with section 166. See section 4.01 of Rev. Proc. 2022-14.

6 Bad debt conformity for banks (section 166)—for banks other than new banks, to the method that conforms to Regulations 

section 1.166-2(d)(3) for the first time the bank makes this change, or to involuntarily revoke this method. This change does not 

fall under the procedures of Rev. Proc. 2022-14. Instead, see Regulations section 1.166-2(d)(3). Note. This change is 

implemented on a cut-off basis and generally with audit protection, but with some conditions or limitations. 

7 Depreciation or amortization (impermissible to permissible) (sections 56, 167, 168, 197, 280F, or former sections 

168, 1400I, 1400L, or 1400N)—from an impermissible method to a permissible method for changes allowed under 

Regulations section 1.446-1(e)(2)(ii)(d), and for depreciable property owned at the beginning of the year of change. Complete 

Schedule E of Form 3115. An applicant changing its method of accounting for depreciation because of a change described in 

DCN 10 (sale or lease transactions) must file Form 3115 according to the DCN 10. Additionally, a qualified small taxpayer 

qualifies for a reduced Form 3115 filing requirement. See section 6.01 of Rev. Proc. 2022-14.

8 Depreciation (permissible to permissible) (sections 56 and 167)—from a permissible method to another permissible 

method listed in section 6.02 of Rev. Proc. 2022-14. Complete Schedule E of Form 3115. Change is implemented on a modified 

cut-off basis. An applicant making a change from a permissible to another permissible method of depreciating MACRS property 

must file Form 3115 according to DCN 200. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing 

requirement. See section 6.02 of Rev. Proc. 2022-14.

10 Sale, lease, or financing transactions (sections 61, 162, 167, 168, and 1012)—from improperly treating property as sold, 

leased, or financed to a permissible method as described in section 6.03 of Rev. Proc. 2022-14. See section 6.03 of Rev. Proc. 

2022-14. Note. This change is implemented on a cut-off basis.

11 Obsolete. See DCN 7.

12 Obsolete.See DCN 7.

13 Obsolete. See DCN 7.

14 Obsolete.See DCN 7.

15 Obsolete.See DCN 210.

16 Amortizable bond premium (section 171)—from amortizing bond premium to not amortizing the premium (revoking the 

section 171(c) election). See section 5.01 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis and is 

also generally made with audit protection, but with conditions or limitations.

17 Research and experimental expenditures (section 174)—from the capitalization method to another permissible method, 

from the expense method to another permissible method, from the deferred expense method to another permissible method, 

from the current period of amortization to a different period of amortization under the deferred expense method, or from

treating research and experimental expenditures under any provision of the Internal Revenue Code other than section 174 to

treating such expenditures under section 174. See section 7.01 of Rev. Proc. 2022-14. Note. This change is implemented on a 

cut-off basis and does not receive audit protection. Note. This change does not apply to costs of developing computer software 

that are paid or incurred in tax years beginning after December 31, 2021. To make a change for such costs, see DCN 265.

18 Computer software expenditures (sections 162 and 167)—for costs of developed, acquired, leased, or licensed computer 

software, to deductible expenses or capital expenditures and amortization (for developed software), to capital expenditures 

and depreciation or amortization (for acquired computer software), or to deductible expenses under Regulations section 

1.162-11 (for leased or licensed computer software). Complete Schedule E of Form 3115 for changes relating to acquired 

computer software or developed computer software if the change is to capital expenditures and amortization. See section 9.01 

of Rev. Proc. 2022-14. Note.This change does not apply to costs of developing computer software that are paid or incurred in 

tax years beginning after December 31, 2021. To make a change for such costs, see DCN 265.

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No. Change

19 Package design costs (section 263)—to the capitalization method, to the design-by-design capitalization and 60-month 

amortization method, or to the pool-of-cost capitalization and 48-month amortization method. See section 11.01 of Rev. Proc. 

2022-14.

20 Line pack gas or cushion gas costs (section 263)—to treating the costs as capital expenditures, the costs of recoverable 

amounts as not depreciable, and the costs of unrecoverable amounts as depreciable. A taxpayer that changes its method for 

the costs of unrecoverable amounts must also change to a permissible method of depreciation for those costs. Complete 

Schedule E of Form 3115 for changes relating to the costs of unrecoverable amounts. See section 11.02 of Rev. Proc. 2022-14.

21 Removal costs (section 263)—for certain costs incurred in the retirement and removal of depreciable assets, to a method 

that conforms with Rev. Rul. 2000-7, 2000-1 C.B. 712, or for removal costs in disposal of a depreciable asset, including a partial 

disposition, as described under Regulations section 1.263(a)-3(g)(2)(i). Additionally, a qualified small taxpayer qualifies for a 

reduced Form 3115 filing requirement. See section 11.03 of Rev. Proc. 2022-14.

22 Certain uniform capitalization methods used by resellers and reseller-producers (section 263A)—for qualifying 

applicants, to a qualifying method or methods. Complete Schedule D, Parts II and III, of Form 3115. See section 12.01 of Rev. 

Proc. 2022-14.

23 Certain uniform capitalization methods used by producers and reseller-producers (section 263A)—for qualifying 

applicants, to a qualifying method or methods. Complete Schedule D, Parts II and III, of Form 3115. See section 12.02 of Rev. 

Proc. 2022-14.

24 Obsolete.See DCN 17.

25 Impact fees (section 263A)—for impact fees incurred in connection with the new construction or expansion of a residential 

building, to treating the costs as capital expenditures allocable to the building. Complete Schedule E of Form 3115 if the 

building is depreciable. See section 12.03 of Rev. Proc. 2022-14.

26 Related party transactions (section 267)—for losses, expenses, and qualified stated interest incurred in transactions 

between related parties, to treating certain deductions attributable to such transactions in accordance with section 267, 

including the exception in section 1.267(a)-3(c)(4). See section 13.01 of Rev. Proc. 2022-14.

27 Obsolete.

28 Bonus or vacation pay deferred compensation (section 404)—for bonuses that are deferred compensation, from treating 

as deductible or capitalizable when accrued, to treating as deductible or capitalizable in the year in which includible in the 

employee’s income, and for vacation pay that is deferred compensation, from treating as deductible or capitalizable when 

accrued to treating as deductible or capitalizable in the year in which paid to the employee. See section 14.01 of Rev. Proc. 

2022-14.

29 Grace period contributions (section 404)—for contributions made to a section 401(k) qualified cash or deferred 

arrangement or matching contributions under section 401(m), from treating contributions made after the end of the tax year but 

before the due date of the tax return as being on account of the tax year without regard to when the underlying compensation is 

earned to treating such contributions as not being on account of the tax year if they are attributable to compensation earned 

after the end of that tax year. See section 14.02 of Rev. Proc. 2022-14.

31 Multi-year insurance policies for multi-year service warranty contracts (section 446)—for a manufacturer, wholesaler, 

or retailer of motor vehicles or other durable consumer goods accounting for multi-year insurance policies for multi-year service 

warranty contracts, to capitalizing and amortizing the costs. See section 15.02 of Rev. Proc. 2022-14.

32 Obsolete.See DCN 233.

33 Obsolete.See DCN 233.

34 First section 448 year (section 448)—for an applicant changing from the cash method for its first section 448 year that 

makes the change using the regulation provision in lieu of Rev. Proc. 2015-13. Complete Schedule A, Part I, of Form 3115. 

Also, complete Schedule D, Parts II and III, as applicable, of Form 3115. This change does not fall under the procedures of Rev. 

Proc. 2015-13. Instead, see Regulations section 1.448-1. (See DCN 123 for taxpayers making the change under Rev. Proc. 

2015-13. For applicants subject to section 447, see DCN 258). Note. This change does not apply for any tax year beginning on 

or after January 5, 2021. See, however, DCN 257.

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No. Change

35 Nonaccrual-experience method (section 448)—for an applicant changing: to a safe harbor method provided in Regulations 

section 1.448-3(f)(1) (the revenue-based moving average method), (f)(2) (the actual experience method), (f)(3) (the modified 

Black Motor method), (f)(4) (the modified moving average method), or (f)(5) (the alternative nonaccrual-experience method); to

a periodic system; from an NAE method to a specific charge-off method; from a sub-method of its current NAE method 

provided in Regulations section 1.448-3 regarding applicable periods to another sub-method regarding applicable periods that 

is permitted under Regulations section 1.448-3, other than a change to exclude tax years from an applicable period under 

Regulations section 1.448-3(d)(6); from a sub-method of its current NAE method provided in Regulations section 1.448-3 

regarding tracing of recoveries to another sub-method regarding tracing of recoveries permitted under Regulations section 

1.448-3(f)(2)(iii); or to the NAE book safe harbor method described in section 5.01 of Rev. Proc. 2011-46, 2011-42 I.R.B. 518. 

Note. An applicant using the NAE book safe harbor method that wants to make certain changes within the NAE book safe 

harbor method (as described in sections 5.02 and 5.03 of Rev. Proc. 2011-46) must attach a statement to its federal income tax 

return in lieu of filing a Form 3115. See Rev. Proc. 2011-46; section 15.03 of Rev. Proc. 2022-14; and Rev. Proc. 2006-56, 

2006-2 C.B. 1169. Note. Certain changes are made on a cut-off basis.

36 Interest accrual on non-performing loans (section 451)—for an accrual method bank accounting for qualified stated 

interest on non-performing loans, to the method whereby interest is accrued until either the loan is worthless under section 166 

and is charged off as a bad debt or the interest is determined to be uncollectible. See section 16.01 of Rev. Proc. 2022-14.

37 Advance rentals (section 451)—for advance rentals other than advance rentals subject to section 467, to inclusion in gross 

income in the tax year received. See section 16.02 of Rev. Proc. 2022-14.

38 State or local income or franchise tax refunds (section 451)—for an accrual method applicant with state or local income or 

franchise tax refunds, to accrue these items in the tax year the applicant receives payments or notice of approval of its refund 

claim (whichever is earlier), according to Rev. Rul. 2003-3, 2003-1 C.B. 252. See section 16.03 of Rev. Proc. 2022-14.

39 Capital cost reduction (CCR) payments (section 451)—for CCR payments (as defined in Rev. Proc. 2002-36, 2002-1 C.B. 

993) made by vehicle lessees, to the method that excludes these payments from the applicant’s gross income and from the 

applicant’s bases in the purchased vehicles. See section 16.04 of Rev. Proc. 2022-14.

41 Obsolete.

42 Timing of incurring employee medical benefits liabilities (section 461)—for an applicant with an obligation to pay an 

employee’s medical expenses (including medical expenses for retirees and employees who filed claims under a workers’ 

compensation act) that is neither insured nor paid from a welfare benefit fund, to treatment as a liability incurred in the tax year 

in which the applicant’s employee files the claim with the applicant; or, if the applicant has a liability to pay a third party for 

medical services to its employees, to treatment as a liability as incurred in the tax year in which the services are provided. See 

section 20.01(1) of Rev. Proc. 2022-14.

43 Timing of incurring real property taxes, personal property taxes, state income taxes, and state franchise taxes 

(section 461)—for a qualifying applicant, to treating these taxes as incurred in the tax year in which the taxes are paid, or to

account for these taxes under the recurring item exception to the economic performance rules, or to revoke the ratable accrual 

election under section 461(c). See section 20.02 of Rev. Proc. 2022-14.

44 Timing of incurring workers’ compensation act, tort, breach of contract, or violation of law liabilities (section 461)—

for a qualifying applicant accounting for self-insured liabilities arising under any workers’ compensation act or out of any tort, 

breach of contract, or violation of law, to treating the liability as incurred in the tax year in which (a) all the events have occurred 

establishing the fact of the liability, (b) the amount of the liability can be determined with reasonable accuracy, and (c) payment 

is made to the person to which the liability is owed. See section 20.03 of Rev. Proc. 2022-14.

45 Timing of incurring certain payroll tax liabilities (section 461)—for FICA and FUTA taxes, state unemployment taxes, and 

railroad retirement taxes, to the method under which the applicant may deduct in Year 1 its otherwise deductible FICA and 

FUTA taxes, state unemployment taxes, and railroad retirement taxes imposed with respect to year-end wages properly 

accrued in Year 1, but paid in Year 2, if the requirements of the recurring item exception are met; or, for state unemployment 

taxes and railroad retirement taxes, to the method stated above where the applicant already uses that method of accounting for 

FICA and FUTA taxes. See section 20.04 of Rev. Proc. 2022-14.

46 Cooperative advertising (section 461)—to incurring a liability in the tax year in which these services are performed, provided 

the manufacturer is able to reasonably estimate this liability even though the retailer does not submit the required claim form 

until the following year. See section 20.05 of Rev. Proc. 2022-14.

47 Distributor commissions (section 263)—from deducting distributor commissions to capitalizing and amortizing distributor 

commissions using the distribution fee period method, the 5-year method, or the useful life method. This change is 

implemented on a cut-off basis and applies only to distributor commissions paid or incurred on or after the beginning of the year 

of change. See section 11.04 of Rev. Proc. 2022-14. Complete Schedule E of Form 3115. 

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List of DCNs

No. Change

48 Cash discounts (section 471)—for cash discounts granted for timely payment, when such discounts approximate a fair 

interest rate, from a method of consistently including the price of the goods before discount in the cost of the goods and 

including in gross income any discounts taken to a method of reducing the cost of the goods by the cash discounts and 

deducting as an expense any discounts not taken, or vice versa. Complete Schedule D, Parts II and III, of Form 3115, as 

applicable. See section 22.01 of Rev. Proc. 2022-14.

49 Estimating inventory shrinkage (section 471)—from the present method of estimating inventory shrinkage in computing 

ending inventory to the retail safe harbor method in section 4 of Rev. Proc. 98-29, 1998-1 C.B. 857, or to a method other than 

the retail safe harbor method, provided (a) the applicant’s present method of accounting does not estimate inventory shrinkage, 

and (b) the applicant’s new method of accounting (that estimates inventory shrinkage) clearly reflects income under section 

446(b). Complete Schedule D, Parts II and III, of Form 3115, as applicable. See section 22.02 of Rev. Proc. 2022-14.

50 Obsolete. See DCN 235.

51 Obsolete. See DCN 235. 

53 Qualifying volume-related trade discounts (section 471)—to treating qualifying volume-related trade discounts as a 

reduction in the cost of merchandise purchased at the time the discount is recognized in accordance with Regulations section 

1.471-3(b). Complete Schedule D, Parts II and III, of Form 3115, as applicable. See section 22.03 of Rev. Proc. 2022-14.

54 Impermissible methods of identification and valuation of inventories (section 471)—for an applicant changing from an 

impermissible method of identifying or valuing inventories to a permissible method of identifying or valuing inventories. 

Complete Schedule D, Parts II and III, of Form 3115, as applicable. See section 22.04 of Rev. Proc. 2022-14.

55 Core alternative valuation method for remanufactured and rebuilt motor vehicle parts (section 471)—for 

remanufactures and rebuilders of motor vehicle parts and resellers of remanufactured and rebuilt motor vehicle parts that use 

the lower of cost or market method to value their inventory of cores, to the safe harbor method of accounting (the Core 

alternative valuation method) to value inventories of cores, as provided for in Rev. Proc. 2003-20, 2003-1 C.B. 445. Complete 

Schedule D, Parts II and III, of Form 3115, as applicable. See section 22.05 of Rev. Proc. 2022-14.

56 Change from LIFO inventory method (section 472)—for an applicant changing from the LIFO inventory method for its entire 

LIFO inventory, or for one or more dollar-value pools within its LIFO inventory, to the permitted method as described in section 

23.01(1)(b) of Rev. Proc. 2022-14. Complete Schedule D, Parts II and III, of Form 3115, as applicable. See section 23.01 of 

Rev. Proc. 2022-14.

57 Determining current-year cost under the LIFO inventory method (section 472)—for an applicant changing its method of 

determining current-year cost to(a) the actual cost of the goods most recently purchased or produced (most-recent acquisitions 

method); (b) the actual cost of the goods purchased or produced during the tax year in the order of acquisition 

(earliest-acquisitions method); (c) the average unit cost equal to the aggregate actual cost of all the goods purchased or 

produced throughout the tax year divided by the total number of units so purchased or produced; (d) the specific identification 

method; or (e) a rolling-average method if the applicant uses that rolling-average method in accordance with Rev. Proc. 

2008-43, 2008-30 I.R.B. 186, as modified by Rev. Proc. 2008-52, 2008-2 C.B. 587. Complete Schedule C, Part I, of Form 3115. 

See section 23.02 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis.

58 Alternative LIFO inventory method (section 472)—for a qualifying applicant that sells new automobiles or new light-duty 

trucks, to the Alternative LIFO Method described in Rev. Proc. 97-36, 1997-2 C.B. 450, as modified by Rev. Proc. 2008-23, 

2008-1 C.B. 664. Complete Schedule C of Form 3115, as applicable. See section 23.03 of Rev. Proc. 2022-14. Note. This 

change is implemented on a cut-off basis.

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No. Change

59 Used Vehicle Alternative LIFO Method (section 472)—for a qualifying applicant that sells used automobiles and used 

light-duty trucks, to the Used Vehicle Alternative LIFO Method, as described in Rev. Proc. 2001-23, 2001-1 C.B. 784, as 

modified by Announcement 2004-16, 2004-1 C.B. 668, and Rev. Proc. 2008-23, 2008-1 C.B. 664. Complete Schedule C, Part I, 

of Form 3115. See section 23.04 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis.

60 Determining the cost of used vehicles purchased or taken as a trade-in (section 472)—for a qualifying applicant, to a 

method of (a) determining the cost of used vehicles acquired by trade-in using the average wholesale price listed by a 

consistently used official used car guide on the date of the trade-in; (b) using a different official used vehicle guide for 

determining the cost of used vehicles acquired by trade-in; (c) determining the cost of used vehicles purchased for cash using 

the actual purchase price of the vehicle; or (d) reconstructing the beginning-of-the-year cost of used vehicles purchased for 

cash using values computed by national auto auction companies based on vehicles purchased for cash, where the national 

auto auction company selected is consistently used. Complete Schedule C, Part I, of Form 3115. See section 23.05 of Rev. 

Proc. 2022-14. Note. This change is implemented on a cut-off basis.

61 Change to IPIC inventory method (section 472)—for a qualifying applicant, from a non-inventory price index computation 

(IPIC) LIFO inventory method to the IPIC method in accordance with all relevant provisions of Regulations section 1.472-8(e)

(3); or from the IPIC method as described in T.D. 7814, 1982-1 C.B. 84 (the old IPIC method) to the IPIC method as described 

in T.D. 8976, 2002-1 C.B. 421 (the new IPIC method), which includes the following required changes (if applicable): from using 

80% of the inventory price index (IPI) to using 100% of the IPI to determine the base-year cost and dollar-value of a LIFO 

pool(s); from using a weighted arithmetic mean to using a weighted harmonic mean to compute an IPI for a dollar-value 

pool(s); and from using a components-of-cost method to define inventory items to using a total-product-cost method to define 

inventory items. Complete Schedule C of Form 3115, as applicable. See section 23.06 of Rev. Proc. 2022-14. Note. This 

change is implemented on a cut-off basis.

62 Changes within IPIC inventory method (section 472)—for one or more of the following changes within IPIC: (a) from the 

double-extension IPIC method to the link-chain IPIC method, or vice versa; (b) to or from the 10% method; (c) to a pooling 

method described in Regulations section 1.472-8(b)(4) or Regulations section 1.472-8(c)(2), including a change to begin or 

discontinue applying one or both of the 5% pooling rules; (d) combine or separate pools as a result of the application of a 5% 

pooling rule described in Regulations section 1.472-8(b)(4) or Regulations section 1.472-8(c)(2); (e) change the selection of 

BLS tables from Table 3 (Consumer Price Index for All Urban Consumers (CPI-U): U.S. city average, detailed expenditure 

categories) of the monthly CPI Detailed Report to Table 9 (Producer price indexes and percent changes for commodity 

groupings and individual items, not seasonally adjusted) of the monthly PPI Detailed Report, or vice versa; (f) change the 

assignment of one or more inventory items to BLS categories under either Table 3 of the monthly CPI Detailed Report or Table 

9 of the monthly PPI Detailed Report; (g) change the representative month when necessitated because of a change in tax year 

or a change in method of determining current-year cost made pursuant to section 23.02 of Rev. Proc. 2022-14; or (h) change 

from using preliminary BLS price indexes to using final BLS price indexes to compute an inventory price index, or vice versa. 

Complete Schedule C of Form 3115, as applicable. See section 23.07 of Rev. Proc. 2022-14. Note. This change is 

implemented on a cut-off basis.

63 Replacement cost method for automobile dealers’ parts inventory (sections 471 and 472)—to the replacement cost 

method for automobile dealers’ parts inventory described in Rev. Proc. 2002-17, 2002-1 C.B. 676. Complete Schedule D, Parts 

II and III, of Form 3115, as applicable. See section 22.06 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off 

basis.

64 Mark-to-market (section 475)—for accounting for securities or commodities by electing commodities dealers, securities 

traders, and commodities traders, to the mark-to-market method under section 475(e) or (f). An election statement must be filed 

earlier than the due date of Form 3115. See Rev. Proc. 99-17, 1999-1 C.B. 503, for rules relating to this statement. See section 

24.01 of Rev. Proc. 2022-14. In general, for an electing dealer or trader, the election cannot be revoked within 5 tax years of the 

election year under the automatic method change described in section 24.02 of Rev. Proc. 2022-14 (DCN 218). Instead, the 

dealer or trader must use the non-automatic change procedures in Rev. Proc. 2015-13 to revoke the election and change to a 

realization method.

65 Dealer status changes (section 475)—for an applicant electing out of certain exemptions from securities dealer status, to the 

mark-to-market method. This change does not fall under the automatic change procedures of Rev. Proc. 2015-13. Instead, see 

Rev. Proc. 97-43, 1997-2 C.B. 494. Note. This change is implemented on a cut-off basis.

66 Bank reserves for bad debts (section 585)—for a bank (as defined in section 581, including a bank for which a qualified 

subchapter S subsidiary (QSub) election is filed) to change from the section 585 reserve method to the section 166 specific 

charge-off method. See section 25.01 of Rev. Proc. 2022-14.

67 Insurance company premium acquisition expenses (section 832)—for certain insurance companies, to a safe harbor 

method of accounting for premium acquisition expenses set forth in Rev. Proc. 2002-46, 2002-2 C.B. 105. See section 26.01 of 

Rev. Proc. 2022-14.

68 Discounted unpaid losses (section 846)—for insurance companies other than life insurance companies computing 

discounted unpaid losses, to the composite method or to alternative methods set forth in Notice 88-100, 1988-2 C.B. 439, and 

Rev. Proc. 2002-74, 2002-2 C.B. 980. See section 27.01 of Rev. Proc. 2022-14.

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List of DCNs

No. Change

70 Functional currency (section 985)—to the use of another functional currency for the applicant or its qualified business unit 

(QBU), other than a QBU described in Regulations section 1.985-1(b)(1)(iii). See section 29.01 of Rev. Proc. 2022-14.

71 Rule of 78s (section 1272)—for stated interest on certain short-term consumer loans, from the Rule of 78s method to the 

constant yield method. See section 15.04 of Rev. Proc. 2022-14.

72 Original issue discount (sections 1272 and 1273)—to the principal-reduction method for de minimis original issue discount 

(OID). See section 30.01 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis and does not receive 

audit protection.

73 Market discount bonds (section 1278)—from including market discount currently in income for the tax year to which the 

discount is attributable to including market discount in income for the tax year of disposition or partial principal payment 

(revoking the section 1278(b) election). Note. This change is implemented on a cut-off basis and is also generally made with 

audit protection, but with conditions or limitations. See section 31.01 of Rev. Proc. 2022-14.

74 Interest income on short-term obligations (section 1281)—to currently including accrued interest and discount in income 

(to comply with section 1281). See section 32.01 of Rev. Proc. 2022-14.

75 Stated interest on short-term loans (section 1281)—for a bank using the cash method of accounting, from accruing stated 

interest on short-term loans made in the ordinary course of business to using the cash method to report such interest. See 

section 32.02 of Rev. Proc. 2022-14.

76 Sales of mortgage loans (section 1286)—for accounting for certain sales of mortgage loans in which the seller also enters 

into a contract to service the mortgages in consideration for amounts received from interest payments, from a method that is 

inconsistent with Rev. Rul. 91-46, 1991-2 C.B. 358, to a method that is consistent with Rev. Rul. 91-46. However, the change is 

only an automatic accounting method change for certain taxpayers who are under examination. This change does not fall under 

the automatic change procedures of Rev. Proc. 2015-13. Instead, see Rev. Proc. 91-51, 1991-2 C.B. 779.

77 Environmental remediation costs (section 263A)—for costs incurred to clean up land that a taxpayer contaminated with 

hazardous waste from the taxpayer’s manufacturing operations, to capitalizing such costs in inventory costs under section 

263A. See section 12.04 of Rev. Proc. 2022-14.

78 Costs of intangibles and certain transactions (section 263(a))—for amounts paid or incurred to acquire or create 

intangibles, or to facilitate an acquisition of a trade or business, a change in the capital structure of a business entity, and certain 

other transactions, to a method of accounting provided in Regulations sections 1.263(a)-4, 1.263(a)-5, and 1.167(a)-3(b). 

Complete Schedule E of Form 3115 for changes to a method of accounting provided in Regulations section 1.167(a)-3(b). See 

section 11.05 of Rev. Proc. 2022-14.

79 REMIC inducement fees (sections 860A–860G)—for an inducement fee received in connection with becoming the holder of 

a noneconomic residual interest in a REMIC, to a safe harbor method provided under Regulations section 1.446-6(e)(1) or (e)

(2). See Rev. Proc. 2004-30, 2004-1 C.B. 950, and section 28.01 of Rev. Proc. 2022-14.

80 All events test method for credit card annual fees (section 451)—to a method that satisfies the all events test in 

accordance with Rev. Rul. 2004-52, 2004-1 C.B. 973. See section 16.05 of Rev. Proc. 2022-14.

81 Ratable inclusion method for credit card annual fees (section 446)—to the ratable inclusion method for credit card annual 

fees. See section 16.05 of Rev. Proc. 2022-14.

82 Obsolete.

83 Full inclusion method for certain advance payments (section 451)—to the full inclusion method, as described in section 

5.01 of Rev. Proc. 2004-34, 2004-1 C.B. 991. The applicant must be using, or changing to, an overall accrual method of 

accounting. See section 16.06 of Rev. Proc. 2022-14. Note. This change may not be made for a year of change beginning on or 

after January 1, 2021. See, however, DCN 254.

84 Deferral method for certain advance payments (section 451)—to the deferral method as described in section 5.02 of Rev. 

Proc. 2004-34, 2004-1 C.B. 991 (except as provided in section 8.03 and 8.04(2) of Rev. Proc. 2004-34). The applicant must be 

using, or changing to, an overall accrual method of accounting. See section 16.06 of Rev. Proc. 2022-14. Note. This change 

may not be made for a year of change beginning on or after January 1, 2021. See, however, DCN 254.

85 Film producer’s treatment of certain creative property costs (section 446)—to account for creative property costs under 

the safe harbor method provided in Rev. Proc. 2004-36, 2004-1 C.B. 1063. See section 15.05 of Rev. Proc. 2022-14.

86 Timber fertilization costs (section 162)—for costs incurred by a timber grower for the post-establishment fertilization of an 

established timber stand, to treat such costs as ordinary and necessary business expenses deductible under section 162. See 

section 3.04 of Rev. Proc. 2022-14.

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List of DCNs

No. Change

87 Change in general asset account treatment due to a change in the use of MACRS property (section 168)—to the 

method of accounting provided in Regulations sections 1.168(i)-1(c)(2)(ii)(E) and 1.168(i)-1(h)(2) (as in effect before January 1, 

2012) or to the method of accounting provided in Regulations section 1.168(i)-1(h)(2) to comply with the 2020 change in law to 

retroactively provide a 30-year recovery period under the alternative depreciation system in section 168(g) for certain residential 

rental property placed in service before 2018 and held by an electing real property trade or business. Complete Schedule E of 

Form 3115. Change is implemented on a modified cut-off basis. Additionally, a qualified small taxpayer qualifies for a reduced 

Form 3115 filing requirement. See Regulations section 1.168(i)-1(l)(2)(ii) and section 6.04 of Rev. Proc. 2022-14.

88 Change in method of accounting for depreciation due to a change in the use of MACRS property (section 168)—to

the method of accounting provided in Regulations section 1.168(i)-4 or to revoke the election provided in Regulations section 

1.168(i)-4(d)(3)(ii) to disregard a change in use of MACRS property. Complete Schedule E of Form 3115. Additionally, a 

qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See Regulations section 1.168(i)-4(g)(2) and 

section 6.05 of Rev. Proc. 2022-14. Note. The applicant is required to calculate a section 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 tax 

year in which the change in the use of the MACRS property occurred by the applicant.

89 Depreciation of qualified non-personal-use vans and light trucks (section 280F)—for certain vehicles placed in service 

before July 7, 2003, to a method of accounting in accordance with Regulations section 1.280F-6(f)(2)(iv). Complete Schedule E 

of Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See Regulations 

section 1.280F-6(f)(2)(iv) and section 6.06 of Rev. Proc. 2022-14.

90 Insurance companies’ incentive payments to health care providers (section 446)—for deducting provider incentive 

payments, to the method of including those payments in discounted unpaid losses without regard to section 404. See section 

15.06 of Rev. Proc. 2022-14.

91 Up-front network upgrade payments received by utilities (section 61)—to a safe harbor method provided in Rev. Proc. 

2005-35, 2005-2 C.B. 76. See section 1.01 of Rev. Proc. 2022-14.

92 Allocation of environmental remediation costs to production (section 263A)—to a method that allocates under section 

263A environmental remediation costs to the inventory produced during the tax year such costs are incurred. See Rev. Rul. 

2005-42, 2005-2 C.B. 67, and section 12.05 of Rev. Proc. 2022-14.

94 Obsolete.

96 Replacement cost method for heavy equipment dealers’ parts inventory (sections 471 and 472)—to the replacement 

cost method for heavy equipment dealers’ parts inventory described in Rev. Proc. 2006-14, 2006-1 C.B. 350. Complete 

Schedule D, Parts II and III, of Form 3115, as applicable. See section 22.07 of Rev. Proc. 2022-14. Note. This change is 

implemented on a cut-off basis.

106 Timing of incurring certain liabilities for services or insurance (section 461)—for an applicant that is currently treating 

the mere execution of a contract for services or insurance as establishing the fact of the liability under section 461 and wants to 

change from that method for liabilities for services or insurance to comply with Rev. Rul. 2007-3, 2007-1 C.B. 350. See section 

20.06 of Rev. Proc. 2022-14.

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

amortizable property (sections 167, 168, or 197; or former sections 168, 1400I, 1400L(b), 1400L(c), or 1400N(d))—for 

an item of certain depreciable or amortizable property that has been disposed of by the applicant and for which the applicant 

did not take into account any depreciation allowance or did take into account some depreciation but less than the depreciation 

allowable, from using an impermissible method of accounting for depreciation to using a permissible method of accounting for 

depreciation. Complete Schedule E of Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 

filing requirement. See section 6.07 of Rev. Proc. 2022-14.

108 Change by bank for uncollected interest (section 446)—for a bank (as defined in Regulations section 1.166-2(d)(4)(i)) that 

uses an accrual method of accounting; is subject to supervision by federal authorities, or by state authorities maintaining 

substantially equivalent standards; and has 6 or more years of collection experience to change to the safe harbor method of 

accounting for uncollected interest (other than interest described in Regulations section 1.446-2(a)(2)) set forth in section 4 of 

Rev. Proc. 2007-33, 2007-1 C.B. 1289. See section 15.07 of Rev. Proc. 2022-14.

109 Rotable spare parts (section 263(a))—for an applicant that maintains a pool or pools of rotable spare parts that are primarily 

used to repair customer-owned (or customer-leased) equipment under warranty or maintenance agreements to the safe harbor 

method provided in Rev. Proc. 2007-48, 2007-2 C.B. 110. Complete Schedule E of Form 3115. See section 11.06 of Rev. Proc. 

2022-14.

110 Rotable spare parts (section 471)—from the safe harbor method (or a similar method) of treating rotable spare parts as 

depreciable assets, in accordance with Rev. Proc. 2007-48, 2007-2 C.B. 110, to treating rotable spare parts as inventoriable 

items. See section 22.08 of Rev. Proc. 2022-14.

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No. Change

111 Advance Trade Discount Method (section 471)—for an accrual method applicant required to use an inventory method of 

accounting and maintaining inventories, as provided in section 471, that receives advance trade discounts to the Advance 

Trade Discount Method described in Rev. Proc. 2007-53, 2007-2 C.B. 233. See section 22.09 of Rev. Proc. 2022-14.

112 Changes to the Vehicle-Pool Method (section 472)—for a retail dealer or wholesaler distributor (reseller) of cars and 

light-duty trucks to the Vehicle-Pool Method as described in Rev. Proc. 2008-23, 2008-1 C.B. 664. See section 23.08 of Rev. 

Proc. 2022-14. Note. This change is implemented on a cut-off basis.

113 Payroll tax liabilities (section 461)—for an accrual method applicant that wants to change its method for FICA and FUTA 

taxes to the safe harbor method provided in Rev. Proc. 2008-25, 2008-1 C.B. 686, which provides that, solely for the purposes 

of the recurring item exception, an applicant will be treated as satisfying the requirement in Regulations section 1.461-5(b)(1)(i) 

for its payroll tax liability in the same tax year in which all events have occurred that establish the fact of the related 

compensation liability and the amount of the related compensation liability can be determined with reasonable accuracy. See 

section 20.04 of Rev. Proc. 2022-14.

114 Rolling-average method of accounting for inventories (sections 471 and 472)—for an applicant required to account for 

inventories under section 471 and that uses a rolling-average method to value inventories for financial accounting purposes to

the same rolling-average method to value inventories for federal income tax purposes, in accordance with Rev. Proc. 2008-43, 

2008-30 I.R.B.186. See section 22.13 of Rev. Proc. 2022-14. Note. This change must be implemented on a cut-off basis unless 

the applicant’s books and records contain sufficient information to compute a section 481(a) adjustment, in which case the 

applicant may choose to implement the change with a section 481(a) adjustment.

116 Obsolete. See DCN 7.

117 Obsolete. See DCN 205 or 206, as applicable.

119 Obsolete. See DCN 7.

121 Repairable and reusable spare parts (section 263(a))—to treat certain repairable and reusable spare parts as depreciable 

property in accordance with the holding in Rev. Rul. 69-200, 1969-1 C.B. 60, or Rev. Rul. 69-201, 1969-1 C.B. 60. Complete 

Schedule E of Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See 

section 11.07 of Rev. Proc. 2022-14.

122 Overall accrual method change that is made other than (1) for the applicant’s first section 448 year, (2) mandatory 

section 448 year, or (3) because taxpayer is subject to section 447 (section 446)—for a qualifying applicant that makes 

a change for a year of change other than in its first section 448 year, mandatory section 448 year, or that is not subject to 

section 447, from the overall cash method to an overall accrual method. Complete Schedule A, Part I, of Form 3115. Also 

complete Schedule D, Parts II and III, as applicable. See section 15.01 of Rev. Proc. 2022-14. Note. See DCN 123 for a change 

in the first section 448 year, DCN 257 for a change made in mandatory section 448 year, or DCN 258 for change made as a 

result of applicant being subject to section 447.

123 Change in overall method from the cash method to an accrual method for the first section 448 year (section 446)—

for an applicant that is required by section 448 to change from the overall cash method to an overall accrual method and the 

applicant qualifies to make the change under the automatic consent procedures of Regulations sections 1.448-1(g) and (h)(2) 

as well as Rev. Proc. 2015-13 for a year of change that is the applicant’s first section 448 year. See Regulations sections 

1.448-1(g) and (h)(2), and section 15.01 of Rev. Proc. 2022-14. Note: This change does not apply to tax years beginning on or 

after January 5, 2021.

124 Change from the cash method to an accrual method for specific items (section 446)—for a qualifying applicant using an 

overall accrual method and accounting for one or more identified specific items of income and expense on the cash method to

an accrual method of accounting for the identified specific item or items. See section 15.08 of Rev. Proc. 2022-14.

125 Multi-year service warranty contracts (section 446)—for an eligible accrual method manufacturer, wholesaler, or retailer of 

motor vehicles or other durable consumer goods that wants to change to the service warranty income method described in 

section 5 of Rev. Proc. 97-38, 1997-2 C.B. 479. See Rev. Proc. 97-38 and section 15.09 of Rev. Proc. 2022-14. Note. This 

change is implemented on a cut-off basis and also has a reduced Form 3115 filing requirement.

126 Overall cash method for specified transportation industry taxpayers (section 446)—for “specified transportation 

industry taxpayers,” as defined in section 15.10(2) of Rev. Proc. 2022-14, with average annual gross receipts of more than $10 

million and not in excess of $50 million to the overall cash method. See section 15.10 of Rev. Proc. 2022-14.

127 Change to overall cash/hybrid method for certain banks (section 446)—for an eligible bank, as defined in section 

15.11(2)(a) of Rev. Proc. 2022-14, to an overall cash/hybrid method described in section 15.12(2)(b) of Rev. Proc. 2022-14. 

See section 15.11 of Rev. Proc. 2022-14.

128 Change to overall cash method for farmers (section 446)—for a qualifying applicant engaged in the trade or business of 

farming to the overall cash method. See section 15.12 of Rev. Proc. 2022-14. Note. For applicants changing from the crop 

method, that portion of the change is implemented using a cut-off basis. For applicants that wish to change to the cash method 

for all items of income and expense and an accrual method for purchases and sales of inventories, see DCN 259.

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No. Change

129 Nonshareholder contributions to capital under section 118 (section 446)—from excluding from gross income under 

section 61 certain payments or the fair market value of property received (including customer connection fees received by a 

regulated public utility described in former section 118(c)), by characterizing the payments or the fair market value of property 

as nontaxable contributions to capital under section 118(c), to including the payments or the fair market value of property in 

gross income under section 61. This change also applies to a regulated public utility described in former section 118(c) that 

changes from including in gross income under section 61 payments or the fair market value of property received that are 

contributions in aid of construction under former section 118(c) and Regulations section 1.118-2 and that meet the 

requirements of former sections 118(c)(1)(B) and 118(c)(1)(C) to excluding from income the payments or the fair market value 

of the property as nontaxable contributions to capital under section 118(a). See section 15.13 of Rev. Proc. 2022-14. Note. The 

change described in section 15.13(1)(a)(ii) of Rev. Proc. 2022-14 does not apply to contributions made after December 22, 

2017.

130 Retainages not received under long-term contracts (section 451)—for an accrual method applicant’s retainages under 

section 451 to a method consistent with the holding in Rev. Rul. 69-314, 1969-1 C.B. 139. This change does not apply to 

retainages under long-term contracts as defined in section 460(f). An applicant changing its method of accounting under this 

section must treat all retainages (receivables and payables) in the same manner. See section 16.07 of Rev. Proc. 2022-14. 

131 Series E, EE, or I U.S. savings bonds (section 454)—for a cash method taxpayer changing the taxpayer’s method of 

accounting for interest income on series E, EE, or I U.S. savings bonds from reporting as interest income the increase in 

redemption price on a bond occurring in a tax year to reporting this income in the tax year in which the bond is redeemed, 

disposed of, or finally matures, whichever is earliest. A statement in lieu of a Form 3115 is authorized for this change. See 

section 17.01 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis.

132 Prepaid subscription income (section 455)—for an accrual method applicant changing its method of accounting for prepaid 

subscription income to the method described in section 455 and the related regulations, including an eligible applicant that 

wants to make the “within 12 months” election under Regulations section 1.455-2. A statement in lieu of a Form 3115 is 

authorized for this change. See section 18.01 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis.

133 Timing of incurring liabilities for bonuses (section 461)—to treat bonuses as incurred in the tax year in which all events 

have occurred that establish the fact of the liability to pay a bonus and the amount of the liability can be determined with 

reasonable accuracy. See section 20.01(2) of Rev. Proc. 2022-14.

134 Timing of incurring liabilities for vacation pay, sick pay, and severance pay (section 461)—to treat vacation pay, sick 

pay, and severance pay as incurred in the tax year in which all events have occurred that establish the fact of the liability to pay 

vacation pay, sick pay, and severance pay, and the amount of the liability can be determined with reasonable accuracy. The 

applicant may make this change if the vacation pay, sick pay, and severance pay vests in that tax year and the vacation pay, 

sick pay, and severance pay is received by the employee by the 15th day of the 3rd calendar month after the end of that tax 

year. See section 20.01(3) of Rev. Proc. 2022-14.

135 Rebates and allowances (section 461)—for an accrual method applicant’s liability for rebates and allowances to the 

recurring item exception method under section 461(h)(3) and Regulations section 1.461-5. See section 20.07 of Rev. Proc. 

2022-14.

136 Change from an improper method of inclusion of rental income or expense to inclusion in accordance with the rent 

allocation (section 467)—for an applicant that is a party to a section 467 rental agreement and is changing its method for its 

fixed rent to the rent allocation method provided in Regulations section 1.467-1(d)(2)(iii). See section 21.01 of Rev. Proc. 

2022-14. Note. This change only receives limited audit protection.

137 Permissible methods of identification and valuation of inventories (section 471)—for an applicant changing from one 

permissible method of identifying and valuing inventories to another permissible method of identifying and valuing inventories. 

Complete Schedule D, Parts II and III, of Form 3115, as applicable. See section 22.10 of Rev. Proc. 2022-14.

138 Change in the official used vehicle guide utilized in valuing used vehicles (section 471)—for a used vehicle dealer 

from not using an official used vehicle guide for valuing used vehicles to using an official used vehicle guide for valuing used 

vehicles; or from using an official used vehicle guide for valuing used vehicles to using a different official used vehicle guide for 

valuing used vehicles. See section 22.11 of Rev. Proc. 2022-14.

139 Invoiced advertising association costs for new vehicle retail dealerships (section 471)—for an applicant engaged in the 

trade or business of retail sales of new automobiles or new light-duty trucks (dealership) from capitalizing certain advertising 

costs as acquisition costs under Regulations section 1.471-3(b) to deducting the advertising costs under section 162 as the 

advertising services are provided to the dealership. See Regulations section 1.461-4(d)(2)(i), and section 22.12 of Rev. Proc. 

2022-14.

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List of DCNs

No. Change

140 Changes within the Used Vehicle Alternative LIFO Method (section 472)—for a taxpayer using the Used Vehicle 

Alternative LIFO Method, as described in Rev. Proc. 2001-23, 2001-1 C.B. 784, as modified by Announcement 2004-16, 

2004-1 C.B. 668, and Rev. Proc. 2008-23, 2008-1 C.B. 664, to use a different “official used vehicle guide” in conjunction with 

the Used Vehicle Alternative LIFO Method, or to a different precise manner of using an official used vehicle guide (for example, 

a change in the specific guide category that an applicant uses to represent vehicles of average condition for purposes of 

section 4.02(5)(a) of Rev. Proc. 2001-23). See section 23.09 of Rev. Proc. 2022-14. Note. This change is implemented on a 

cut-off basis.

141 Changes to dollar-value pools of manufacturers (section 472)—for a manufacturer that purchases goods for resale 

(resale goods) and thus must reassign resale goods from the pool(s) it maintains for the goods it manufactures to one or more 

resale pools, and the manufacturer wants to change from using multiple pools described in Regulations section 1.472-8(b)(3) 

to using natural business unit (NBU) pools described in Regulations section1.472-8(b)(1), or vice versa; or wants to reassign 

items in NBU pools described in Regulations section 1.472-8(b)(1) into the same number or a greater number of NBU pools. 

See section 23.10 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis.

145 Tenant construction allowances (section 168)—for an applicant changing from improperly treating the applicant as having 

a depreciable interest in the property subject to the tenant construction allowances for federal income tax purposes to properly 

treating the applicant as not having a depreciable interest in such property for federal income tax purposes; or from improperly 

treating the applicant as not having a depreciable interest in the property subject to the tenant construction allowances for 

federal income tax purposes to properly treating the applicant as having a depreciable interest in such property for federal 

income tax purposes. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See section 

6.08 of Rev. Proc. 2022-14.

146 Obsolete. See DCN 205.

147 Obsolete. See DCN 206.

148 Debt issuance costs (section 446)—for an applicant changing its method of accounting to comply with Regulations section 

1.446-5, which provides rules for allocating the costs over the term of the debt. See section 15.14 of Rev. Proc. 2022-14.

149 Ratable accrual of real property taxes (section 461)—for an accrual method applicant for real property taxes that relate to a 

definite period of time to the method described in section 461(c) and section 1.461-1(c)(1) (ratable accrual election) for a tax 

year other than the applicant’s first tax year in which real property taxes are incurred. See section 20.08 of Rev. Proc. 2022-14. 

Note. This change has a reduced Form 3115 filing requirement. 

150 Retail sales facility safe harbor for a motor vehicle dealership (section 263A)—for a motor vehicle dealership to treat its 

sales facility as a retail sales facility as described in section 5.01 of Rev. Proc. 2010-44, 2010-49 I.R.B. 811. See section 12.06 

of Rev. Proc. 2022-14.

151 Reseller without production activities safe harbor for a motor vehicle dealership (section 263A)—for a motor vehicle 

dealership to be treated as a reseller without production activities as described in section 5.02 of Rev. Proc. 2010-44, 2010-49 

I.R.B. 811. See section 12.06 of Rev. Proc. 2022-14.

152 Deduction for energy efficient commercial buildings (section 179D)—for an applicant to change its method of accounting 

to deduct under section 179D amounts paid or incurred for the installation of energy efficient commercial building property, 

subject to the limits of section 179D(b), in the year the property is placed in service. See Rev. Proc. 2012-39, 2012-2 C.B. 470, 

and section 8.01 of Rev. Proc. 2022-14. Note. This change does not receive audit protection.

153 Certain revenue recognition methods of accounting—change in applicable financial statements (AFS) (section 451)

— for an applicant with an AFS (1) using the deferral method for including advance payments in gross income in accordance 

with its AFS to change its method to recognize advance payments in gross income consistent with a changed manner for 

recognizing advance payments for its AFS; or (2) that includes amounts in income in accordance with Regulations section 

1.451-3 that has a change in the manner in which the item, or portion of it, is taken into account as AFS revenue or has a 

change in transaction price allocation to performance allocations to use the new AFS method for purposes of Regulations 

section 1.451-3(b)(1) or (d), as applicable. The requirement in section 6.03(3)(a) of Rev. Proc. 2015-13 to provide an additional 

copy of the application to the examining agent(s), appeals officer(s), and counsel to the government, if applicable, applies to 

this application. A statement in lieu of a Form 3115 is authorized for this change. See section 16.08 of Rev. Proc. 2022-14. 

Note. This change is implemented on a cut-off basis or with a section 481(a) adjustment depending on the change being made 

and does not receive audit protection. This change does not apply to method changes relating to Rev. Proc. 2004-34, section 

451(b), Proposed Regulations section 1.451-3, and Proposed Regulations section 1.451-8 for tax years beginning on or after 

January 1, 2021.

154 California franchise taxes (Rev. Rul. 2003-90)—for an accrual method applicant changing to recognizing its California 

franchise tax liability in the tax year following the tax year in which the tax is incurred under the Cal. Rev. & Tax Code. See 

section 20.09 of Rev. Proc. 2022-14.

155 Unearned premiums (section 833)—for a Blue Cross or Blue Shield organization within the meaning of section 833(c)(2) or 

an organization described in section 833(c)(3) required to change its method of accounting for unearned premiums because it 

fails to meet or meets anew the MLR requirements of section 833(c)(5). See section 26.02 of Rev. Proc. 2022-14.

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No. Change

156 Gift cards issued as a refund (Rev. Proc. 2011-17)—for an accrual method applicant who issues gift cards as a refund for 

returned goods changing to treat the transaction as the payment of a cash refund and sale of a gift card in the amount of the gift 

card, as provided in Rev. Proc. 2011-17, 2011-5 I.R.B. 441. See section 20.10 of Rev. Proc. 2022-14.

157 Classification of wireless telecommunications assets used by wireless telecommunications carriers (sections 167 

and 168)—for applicants that have a depreciable interest in wireless telecommunications assets (as defined in Rev. Proc. 

2011-22, 2011-8 I.R.B. 737) used primarily to provide wireless telecommunications or broadband services by mobile phones 

that are changing to the method described in Rev. Proc. 2011-22 to determine the recovery periods for depreciation of certain 

tangible assets used by wireless telecommunications carriers. Additionally, a qualified small taxpayer qualifies for a reduced 

Form 3115 filing requirement. See Rev. Proc. 2011-22 and section 6.09 of Rev. Proc. 2022-14.

158 Wireline network property (section 263(a))—for certain applicants that have a depreciable interest in wireline network 

assets (as described in section 4 of Rev. Proc. 2011-27, 2011-8 I.R.B. 740) used primarily to provide wireline 

telecommunications or broadband services that are changing to (a) the wireline network assets maintenance allowance method 

described in section 5 of Rev. Proc. 2011-27; or (b) the adoption of all, or some, of the units of property described in section 6 of 

Rev. Proc. 2011-27, to determine whether expenditures to maintain, replace, or improve wireline network assets must be 

capitalized under section 263(a). See section 3.07 of Rev. Proc. 2022-14.

159 Wireless network property (section 263(a))—for certain applicants that have a depreciable interest in wireless network 

assets (as described in section 4 of Rev. Proc. 2011-28, 2011-8 I.R.B. 743) used primarily to provide wireless 

telecommunications or broadband services by mobile phones that are changing to (a) the wireless network asset maintenance 

allowance method described in section 5 of Rev. Proc. 2011-28, or (b) the adoption of all, or some, of the units of property 

described in section 6 of Rev. Proc. 2011-28, to determine whether expenditures to maintain, replace, or improve wireless 

network assets must be capitalized under section 263(a). See section 3.08 of Rev. Proc. 2022-14.

160 Electric transmission and distribution property (section 263(a))—for certain applicants that have a depreciable interest in 

electric transmission or distribution property (as described in section 4 of Rev. Proc. 2011-43, 2011-37 I.R.B. 326) used 

primarily to transport, deliver, or sell electricity that are changing to the method described in Rev. Proc. 2011-43, to determine 

whether expenditures incurred to maintain, replace, or improve transmission and distribution property are deductible repairs 

under section 162 or capitalizable improvements under section 263(a). See section 3.09 of Rev. Proc. 2022-14.

161 Timing of incurring liabilities under the recurring item exception to the economic performance rules (section 461(h)

(3))—for an applicant changing to a method of accounting to conform to any of the holdings in Rev. Rul. 2012-1, 2012-2 I.R.B. 

255, which addresses the “not material” and “better matching” requirements of the recurring item exception and distinguishes 

contracts for the provision of services from insurance and warranty contracts. See section 20.11 of Rev. Proc. 2022-14.

175 Obsolete. See DCN 199.

176 Obsolete. See DCN 200.

177 Obsolete. See DCN 205.

178 Obsolete. See DCN 206.

179 Obsolete. See DCN 207.

181 Plants removed from the list of plants that have a preproductive period in excess of 2 years (section 263A)—for an 

applicant that is not a corporation, partnership, or tax shelter required to use an accrual method of accounting and either is 

changing to not applying section 263A to the production of a plant or plants that have been removed from the list of plants with 

a nationwide weighted average preproductive period in excess of 2 years, or is revoking its section 263A(d)(3) election to not 

apply section 263A to the production of a plant or plants that have been removed from the list of plants with a nationwide 

weighted average preproductive period in excess of 2 years. See Rev. Proc. 2013-20 and section 12.07 of Rev. Proc. 2022-14.

182 Steam or electric power generation property (section 263(a))—for an applicant changing its method of accounting for its 

treatment of expenditures on generation property (as defined in section 4.01 of Rev. Proc. 2013-24, 2013-22 I.R.B. 1142) to

use all or some of the unit of property definitions and the corresponding major component definitions described in Appendix A 

of Rev. Proc. 2013-24, to determine whether expenditures to maintain, replace, or improve generation property must be 

capitalized under section 263(a). See section 3.10 of Rev. Proc. 2022-14.

183 Change to proportional method of accounting for OID on a pool of credit card receivables (section 1272(a)(6))—for 

an eligible taxpayer that wants to change to the proportional method of accounting for original issue discount (OID) on a pool of 

credit card receivables, as described in Rev. Proc. 2013-26, 2013-22 I.R.B. 1160, as modified by Rev. Proc. 2021-35, 2021-35 

I.R.B. 355. See section 30.02 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis.

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List of DCNs

No. Change

184 Deducting repair and maintenance costs or capitalizing improvement costs (sections 162 and 263(a))—for an 

applicant changing to deducting amounts paid or incurred for repair and maintenance costs under section 162 and Regulations 

section 1.162-4 or changing to capitalizing amounts paid or incurred for improvements to tangible property and, if depreciable, 

to depreciating such property under section 167 or 168. Includes a change by an applicant in the method of identifying units of 

property under Regulations section 1.263(a)-3(e) for purposes of determining whether amounts paid or incurred improve a unit 

of property under Regulations section 1.263(a)-3. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 

filing requirement. See section 11.08 of Rev. Proc. 2022-14. 

185 Change to the regulatory accounting method (section 162)—for a regulated applicant changing its method of accounting 

for amounts paid or incurred to repair or maintain tangible property to follow its method of accounting for regulatory accounting 

purposes to determine whether an amount paid or incurred improves property under Regulations section 1.263(a)-3, consistent 

with Regulations section 1.263(a)-3(m). Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing 

requirement. See section 11.08 of Rev. Proc. 2022-14. 

186 Deducting non-incidental materials and supplies when used or consumed (section 162)—for an applicant changing its 

method of accounting for non-incidental materials and supplies to the method of deducting such amounts in the tax year in 

which they are actually used or consumed, consistent with Regulations section 1.162-3. Additionally, a qualified small taxpayer 

qualifies for a reduced Form 3115 filing requirement. See section 11.08 of Rev. Proc. 2022-14. 

187 Deducting incidental materials and supplies when paid or incurred (section 162)—for an applicant that wants to change 

its method of accounting for incidental materials and supplies to the method of deducting such amounts in the tax year in which 

they are paid or incurred, consistent with Regulations section 1.162-3. Additionally, a qualified small taxpayer qualifies for a 

reduced Form 3115 filing requirement. See section 11.08 of Rev. Proc. 2022-14. 

188 Deducting non-incidental rotable and temporary spare parts when disposed (section 162)—for an applicant changing 

its method of accounting for costs to acquire or produce non-incidental rotable and temporary spare parts to the method of 

deducting such costs in the tax year in which the taxpayer disposes of the parts, consistent with Regulations section 1.162-3. 

Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See section 11.08 of Rev. Proc. 

2022-14. 

189 Change to the optional method for rotable and temporary spare parts (section 162)—for an applicant changing its 

method of accounting for rotable and temporary spare parts to the optional method of accounting for rotable and temporary 

spare parts (described in Regulations section 1.162-3(e)), consistent with Regulations section 1.162-3. Additionally, a qualified 

small taxpayer qualifies for a reduced Form 3115 filing requirement. See section 11.08 of Rev. Proc. 2022-14. 

190 Deducting dealer expenses that facilitate the sale of property (section 162)—for an applicant that is a dealer in property 

changing its method of accounting for commissions and other costs paid or incurred to facilitate the sale of tangible property to

the method of treating such costs as ordinary and necessary business expenses, consistent with Regulations section 

1.263(a)-1(e)(2). Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See section 11.08 

of Rev. Proc. 2022-14. 

191 Non-dealer expense to facilitate the sale of property (section 263(a))—for an applicant that is not a dealer in property 

changing its method of accounting for commissions and other costs paid or incurred to facilitate the sale of property to the 

method of capitalizing such costs, consistent with Regulations section 1.263(a)-1(e)(1). Additionally, a qualified small taxpayer 

qualifies for a reduced Form 3115 filing requirement. See section 11.08 of Rev. Proc. 2022-14. 

192 Capitalizing acquisition or production costs (section 263(a))—for an applicant changing its method of accounting to

capitalizing amounts paid or incurred to acquire or produce property under Regulations section 1.263(a)-2 and, if depreciable, 

to depreciating such property under section 167 or 168. Additionally, a qualified small taxpayer qualifies for a reduced Form 

3115 filing requirement. See section 11.08 of Rev. Proc. 2022-14. 

193 Deducting certain costs for investigating or pursuing the acquisition of property (section 162)—for an applicant 

changing its method of accounting from capitalizing to deducting amounts paid or incurred in the process of investigating or 

otherwise pursuing (a) the acquisition of real property if the amounts meet the requirements of Regulations section 1.263(a)-2(f)

(2)(iii); or (b) the acquisition of real or personal property if the amounts are for employee compensation or overhead costs under 

Regulations section 1.263(a)-2(f)(2)(iv), consistent with Regulations section 1.263(a)-2. Additionally, a qualified small taxpayer 

qualifies for a reduced Form 3115 filing requirement. See section 11.08 of Rev. Proc. 2022-14. 

194 Change to a reasonable allocation method for self-constructed assets (section 263A)—for a producer or a 

reseller-producer to a reasonable allocation method under Regulations section 1.263A-1(f)(4) for self-constructed assets or 

from not capitalizing a cost subject to section 263A to capitalizing that cost under a reasonable allocation method under 

Regulations section 1.263A-1(f)(4) that the producer or reseller-producer is already using for self-constructed assets. See 

section 12.08 of Rev. Proc. 2022-14.

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List of DCNs

No. Change

195 Real property acquired through foreclosure (section 263A)—for an applicant that capitalizes costs under section 263A(b)

(2) and Regulations section 1.263A-3(a)(1) to real property acquired through foreclosure, or similar transaction, to an otherwise 

permissible method of accounting under which the acquisition and holding costs for real property acquired through foreclosure, 

or similar transaction, are not capitalized under section 263A(b)(2) and Regulations section 1.263A-3(a)(1). See section 12.09 

of Rev. Proc. 2022-14.

196 Obsolete.

197 Obsolete.

198 Partial dispositions of tangible depreciable asset to which the IRS’s adjustment pertains (section 168)—for MACRS 

property for which the applicant is making a partial disposition election under Regulations section 1.168(i)-8(d)(2)(iii) to the 

disposition of a portion of the asset to which the IRS’s adjustment pertains (as described in Regulations section 1.168(i)-8(d)(2)

(iii)). Complete Schedule E of Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing 

requirement. See section 6.10 of Rev. Proc. 2022-14.

199 Depreciation of leasehold improvements (sections 167, 168, and 197)—for leasehold improvements in which the 

applicant has a depreciable interest at the beginning of the year of change, from improperly depreciating or amortizing these 

leasehold improvements over the term of the lease (including renewals, if applicable) to properly depreciating or amortizing 

these leasehold improvements under section 167(f)(1), 168, or 197, as applicable. Complete Schedule E of Form 3115. 

Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See section 6.11 of Rev. Proc. 

2022-14.

200 Depreciation of MACRS property (permissible to permissible) (section 168)—for MACRS property, from a permissible 

method to another permissible method listed in section 6.12(3) of Rev. Proc. 2022-14. Certain changes are made on a modified 

cut-off basis or a cut-off basis. Complete Schedule E of Form 3115. Additionally, a qualified small taxpayer qualifies for a 

reduced Form 3115 filing requirement. See section 6.12 of Rev. Proc. 2022-14. 

201 Sales-based royalties (section 263A)—for sales-based royalties (as described in Regulations section 1.263A-1(e)(3)(ii)(U)

(2)) properly allocable to inventory property for which the applicant is making a change listed in section 12.10(1) of Rev. Proc. 

2022-14. See Rev. Proc. 2014-33 and section 12.10 of Rev. Proc. 2022-14.

202 Sales-based vendor chargebacks under a simplified method (section 263A)—for an applicant changing its method of 

accounting to no longer include cost adjustments for sales-based vendor chargebacks (as described in Regulations section 

1.471-3(e)(1)) in the formulas used to allocate additional section 263A costs to ending inventory under a simplified method. See 

Rev. Proc. 2014-33 and section 12.11 of Rev. Proc. 2022-14.

203 Sales-based vendor chargebacks (section 471)—for an applicant changing its method of accounting to treat sales-based 

vendor chargebacks as a reduction in cost of goods sold in accordance with Regulations section 1.471-3(e)(1). See Rev. Proc. 

2014-33 and section 22.14 of Rev. Proc. 2022-14.

204 Retail inventory method (section 471)—for an applicant using the retail inventory method, a change to (a) not adjusting the 

numerator of the cost complement for an allowance, discount, or price rebate required by Regulations section 1.471-3(e) to 

reduce only cost of goods sold; (b) not adjusting the denominator of the cost complement for temporary markups and 

markdowns; (c) computing the cost complement using a method described in Regulations section 1.471-8(b)(3) (including 

changes from a method described in section 1.471-8(b)(3) to another method described in that section) for a retail LCM 

applicant; or (d) adjusting the denominator of the cost complement for permanent markups and markdowns for a retail cost 

applicant. See section 22.15 of Rev. Proc. 2022-14. Note. A taxpayer making any of these changes for its first or second tax 

year after December 31, 2014, may use either a section 481(a) adjustment or a cut-off basis to implement the change.

205 Dispositions of a building or structural component (section 168)—for MACRS property for which the applicant is making 

a change listed in section 6.13(3) of Rev. Proc. 2022-14 for disposing of a building or a structural component or disposing of a 

portion of a building (including its structural components) to which the partial disposition rule in Regulations section 1.168(i)-8(d)

(1) applies. Complete Schedule E of Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing 

requirement. See section 6.13 of Rev. Proc. 2022-14. 

206 Dispositions of tangible depreciable assets (other than a building or its structural components) (section 168)—for 

MACRS property for which the applicant is making a change listed in section 6.14(3) of Rev. Proc. 2022-14 for disposing of 

section 1245 property or a depreciable land improvement or disposing of a portion of section 1245 property or a depreciable 

land improvement to which the partial disposition rule in Regulations section 1.168(i)-8(d)(1) applies. Complete Schedule E of 

Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See section 6.14 of 

Rev. Proc. 2022-14.

207 Dispositions of tangible depreciable assets in a general asset account (section 168)—for MACRS property for which 

the applicant is making a change listed in section 6.15(3) of Rev. Proc. 2022-14 for disposing of an asset subject to a general 

asset account election. Complete Schedule E of Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced 

Form 3115 filing requirement. See section 6.15 of Rev. Proc. 2022-14.

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208 Cable network asset maintenance allowance or unit of property method of accounting (section 263(a))—for certain 

applicants that operate and have a depreciable interest in cable network assets used in a cable system that provides video, 

high speed internet, and VOIP phone services that are changing to (a) the network maintenance allowance method for cable 

network assets described in section 5 of Rev. Proc. 2015-12, 2015-2 I.R.B. 265; or (b) the adoption of all, or some, of the units 

of property described in section 6 of Rev. Proc. 2015-12, to determine whether expenditures to maintain, replace, or improve 

cable network assets must be capitalized under section 263(a). See section 3.11 of Rev. Proc. 2022-14.

209 Cable network customer drops and labor costs associated with installing customer premise equipment (section 

263(a))—for certain applicants that operate cable systems and (a) are changing to the specific identification method described 

in section 7.01(1) of Rev. Proc. 2015-12, or the safe harbor allocation method described in section 7.01(2) of Rev. Proc. 

2015-12 for determining whether customer drop costs (including installations) may be deducted under section 162 or must be 

capitalized under section 263(a), or (b) are changing to deducting labor costs associated with installing customer premise 

equipment under section 7.02 of Rev. Proc. 2015-12. See section 3.11 of Rev. Proc. 2022-14.

210 Depreciation of fiber optic transfer node and fiber optic cable used by a cable system operator (section 168)—for a 

cable system operator within the scope of Rev. Proc. 2015-12 that is changing to the safe harbor method of accounting in 

section 8.03 of Rev. Proc. 2015-12 for determining depreciation of a fiber optic transfer node and trunk line consisting of fiber 

optic cable used in a cable distribution network providing one-way and two-way communication services. See Rev. Proc. 

2015-12 and section 6.17 of Rev. Proc. 2022-14.

211 Bad debt conformity election by bank after previous election automatically revoked (section 166)—for an eligible bank 

changing its method of accounting for bad debts by making the conformity election under Regulations section 1.166-2(d)(3)(iii)

(C)(3). See section 4.02 of Rev. Proc. 2022-14.

212 Change to comply with section 163(e)(3)—for a taxpayer changing its method or methods of accounting to comply with the 

requirements of section 163(e)(3), which defers certain deductions attributable to OID debt instruments held by related foreign 

persons. Any portion of the OID will not be allowable as a deduction to the U.S. person issuer until paid. See section 5.02 of 

Rev. Proc. 2022-14.

213 Railroad track structure expenditures (section 263(a))—for a taxpayer changing its method of accounting for track 

structures to (a) the safe harbor method provided in Rev. Proc. 2002-65, 2002-2 C.B. 700; or (b) the safe harbor method 

provided in Rev. Proc. 2001-46, 2001-2 C.B. 263. See section 11.09 of Rev. Proc. 2022-14.

214 U.S. ratio method (section 263A)—for a foreign person (as defined in Notice 88-104, as modified by Notice 89-67) required 

to capitalize costs under section 263A that is changing its method of accounting to the U.S. ratio method (as described in 

Notice 88-104) or that currently uses the U.S. ratio method and is changing to the U.S. ratio method of a different applicable 

U.S. trade or business for applying the U.S. ratio method. See section 12.12 of Rev. Proc. 2022-14.

215 Depletion (section 263A)—for an applicant changing its method of accounting for depletion to treat these amounts as an 

indirect cost that is only properly allocable to property that has been sold under Regulations section 1.263A-1(e)(3)(ii)(J). See 

section 12.13 of Rev. Proc. 2022-14.

216 Obsolete.

217 Retainages received under long-term contracts (section 451)—for an accrual method applicant’s retainages under section 

451 to a method consistent with the holding in Rev. Rul. 69-314, 1969-1 C.B. 139. This change only applies to retainages under 

long-term contracts as defined in section 460(f) that are exempt construction contracts (as defined in Regulations section 

1.460-3(b)(1)). An applicant changing its method of accounting under this section must treat all retainages (receivables and 

payables) in the same manner. See section 16.07 of Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis.

218 Change from the mark-to-market method of accounting to a realization method (section 475)—for a taxpayer changing 

its method of accounting for securities or commodities from the mark-to-market method described in section 475 to a 

realization method of accounting (for example, by revoking an election under section 475(e), section 475(f)(1), or section 475(f)

(2)). A notification statement must be filed earlier than the due date of the Form 3115. See section 24.02 of Rev. Proc. 2022-14. 

Note. This change is generally made with audit protection, but has conditions or limitations. This change is also implemented 

on a cut-off basis.

219 Change in qualification as life/non-life insurance company (section 816)—for a taxpayer changing its qualification under 

section 816(a) to move from a life insurance company taxable under Part I of subchapter L to a non-life insurance company 

taxable under Part II of subchapter L, or vice versa. See section 26.03 of Rev. Proc. 2022-14. Note. This change does not 

receive audit protection. 

220 Economic performance safe harbor for Ratable Service Contracts (section 461)—for an accrual method taxpayer that 

wants to change its treatment of Ratable Service Contracts to conform to the safe harbor method provided by Rev. Proc. 

2015-39, 2015-33 I.R.B. 197. See section 20.12 of Rev. Proc. 2022-14. 

221 Obsolete.

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222 Remodel-refresh safe harbor method (section 263)—for a qualified taxpayer changing to the remodel-refresh safe harbor 

method of accounting provided in section 5.02 of Rev. Proc. 2015-56 for its qualified costs, including the making of a late 

general asset account election as provided under section 5.02(6)(d) of Rev. Proc. 2015-56. Additionally, a qualified small 

taxpayer qualifies for a reduced Form 3115 filing requirement. See section 11.10 of Rev. Proc. 2022-14. Note. This change is 

generally made with audit protection, but has conditions or limitations. Certain changes are also implemented on a cut-off basis. 

223 Start-up expenditures (section 195)— for an applicant changing its method of accounting under section 195 to change the 

characterization of an item as a start-up expenditure, the determination of the tax year in which the taxpayer begins the active 

trade or business to which the start-up expenditures relate, or the amortization period of a start-up expenditure to 180 months. 

See section 10.01 of Rev. Proc. 2022-14.

224 Interest capitalization (section 263A)—for an applicant changing its method of accounting for interest from not capitalizing 

any interest, capitalizing interest in accordance with its method of accounting for financial reporting purposes, or applying an 

improper method of capitalizing interest under Regulations sections 1.263A-8 through -14, with respect to the production of 

designated property, to capitalizing interest with respect to the production of designated property in accordance with 

Regulations sections 1.263A-8 through -14. See section 12.14 of Rev. Proc. 2022-14.

225 Certain changes within the retail inventory method (section 471)—for an applicant using the retail inventory method that 

wants to change from including to not including temporary markups and markdowns in determining the retail selling prices of 

goods on hand at the end of the tax year. See section 22.16 of Rev. Proc. 2022-14.

226 Transfer of interties under the safe harbor described in Notice 2016-36 (section 118)—for a utility changing to the safe 

harbor method of accounting provided in section III.C of Notice 2016-36 for the treatment under section 118 of a transfer of an 

intertie, including a dual-use intertie, by a generator to a utility, or for a utility using the safe harbor method of accounting 

provided in section III.C of Notice 2016-36 and is required to terminate that safe harbor method of accounting. See section 

15.15 of Rev. Proc. 2022-14. Note. The change from using the safe harbor method of accounting provided in section III.C of 

Notice 2016-36 to terminating that safe harbor method of accounting is implemented on a cut-off basis.

227 Change to or from the net asset value (NAV) method (section 446)—for an applicant that holds shares in a money market 

fund (MMF) and that wants to change its method of accounting for gain or loss on the shares from a realization method to the 

NAV method described in Regulations section 1.446-7 or from the NAV method to a realization method. See section 15.16 of 

Rev. Proc. 2022-14. Note. This change is implemented on a cut-off basis and also has a reduced Form 3115 filing requirement.

228 Organizational expenditures under section 248 (section 248)—for a corporation changing its method of accounting under 

section 248 to change the characterization of an item as an organizational expenditure, the determination of the tax year in 

which the corporation begins business to which the organizational expenditures relate, or the amortization period of an 

organizational expenditure to 180 months. See section 10.02 of Rev. Proc. 2022-14.

229 Organization fees under section 709 (section 709)—for a partnership changing its method of accounting under section 709 

to change the characterization of an item as an organizational expense, the determination of the tax year in which the 

partnership begins business to which the organizational expenses relate, or the amortization period of an organizational 

expense to 180 months. See section 10.03 of Rev. Proc. 2022-14.

230 Change from currently deducting inventories to permissible methods of identification and valuation of inventories 

(section 471)—for an applicant changing from currently deducting inventories to a permissible method of identifying and 

valuing inventories. See section 22.17 of Rev. Proc. 2022-14.

231 Changes in the timing of recognition of income due to the New Standards (section 451)—for an applicant that wants to 

change its method of accounting for the recognition of income to a method under the new financial accounting standards jointly 

announced by the Financial Accounting Standards Board and the International Accounting Standards Board for (i) identifying 

performance obligations, (ii) allocating transaction price to performance obligations, and/or (iii) considering performance 

obligations satisfied. See section 16.09 of Rev. Proc. 2022-14. Note. A taxpayer making this change may implement the 

change with either a section 481(a) adjustment or on a cut-off basis. This change applies to a tax year beginning on or before 

May 10, 2022. An applicant that makes a New Standards change that also wants to comply with section 451(b) and Regulations 

section 1.451-3, and/or section 451(c) and Regulations section 1.451-8(a) or (c) must use section 16.06, 16.08, or 16.10 of 

Rev. Proc. 2022-14, as applicable.

232 Change to not apply section 263A to replanting costs for lost or damaged citrus plants pursuant to section 263A(d)

(2)(C)—for certain applicants that currently capitalize costs of replanting citrus plants under section 263A(d)(2), to not applying 

section 263A to those costs under section 263A(d)(2)(C). Costs must be paid or incurred after December 22, 2017, and on or 

before December 22, 2027. See Rev. Proc. 2018-35, 2018-28 I.R.B. 204, and section 12.15 of Rev. Proc. 2022-14. Note. The 

section 481(a) adjustment is calculated by taking into account only amounts paid or incurred after December 22, 2017, and on 

or before December 22, 2027.

233 Overall cash method for a small business taxpayer (section 446)—for a qualifying applicant with average annual gross 

receipts of $25 million or less (adjusted for inflation) changing to the overall cash method. Complete certain lines of Schedule A, 

Part I, of Form 3115. See section 15.17 of Rev. Proc. 2022-14.

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No. Change

234 Uniform capitalization exception for a small business taxpayer (section 263A)—for a qualifying applicant with average 

annual gross receipts of $25 million or less (adjusted for inflation) changing from capitalizing costs under section 263A to no 

longer capitalizing costs under section 263A, including for self-constructed assets. See Rev. Proc. 2018-40 and section 12.16 

of Rev. Proc. 2022-14.

235 Inventory exception for a small business taxpayer (section 471)—for a qualifying applicant with average annual gross 

receipts of $25 million or less (adjusted for inflation) changing its accounting method for inventory items under section 471 to

one of the following methods: (a) treating inventory as non-incidental materials and supplies (NIMS) under section 471(c)(1)(B)

(i); (b) treating inventory as NIMS under Proposed Regulations section 1.471-1(b)(4); (c) a method that conforms to section 

471(c)(1)(B)(ii) by using the taxpayer’s method of accounting reflected in its AFS, as defined in section 451(b)(3), with respect 

to the tax year, or if the taxpayer does not have an AFS for the tax year, the books and records of the taxpayer prepared in 

accordance with the taxpayer’s accounting procedures; or (d) the AFS section 471(c) method in Proposed Regulations section 

1.471-1(b)(5), or if the taxpayer does not have an AFS for the tax year, the non-AFS section 471(c) method described in 

Proposed Regulations section 1.471-1(b)(6). See section 22.18 of Rev. Proc. 2022-14. Note. This change does not apply to tax 

years beginning on or after January 5, 2021. See, however, DCN 260 or 261 for tax years beginning on or after January 5, 2021.

236 Long-term contract exception for small business taxpayer (section 460)—for a qualifying applicant with average annual 

gross receipts of $25 million or less (adjusted for inflation) (a) changing from the percentage-of-completion accounting method 

described in Regulations section 1.460-4(b) for exempt long-term construction contracts described in section 460(e)(1)(B) to

an exempt contract accounting method described in section 1.460-4(c), or (b) with long-term home construction contracts 

defined in section 460(e)(1)(A) changing its accounting method to stop capitalizing costs under 263A. Complete Schedule D, 

Part I, of Form 3115. See section 19.01 of Rev. Proc. 2022-14. Note. A change to account for exempt long-term contracts 

under this change is made on a cut-off basis.

237 Recharacterizing costs under the simplified resale method, the simplified production method, or the modified 

simplified production method—for an applicant that uses or is changing to the simplified resale method, the simplified 

production method, or the modified simplified production method and wants to recharacterize a section 471 cost, as defined in 

section 1.263A-1(d)(2), as an additional section 263A cost, as defined in section 1.263A-1(d)(3), or vice versa. See section 

12.17 of Rev. Proc. 2022-14.

238 Revocation of a historic absorption ratio election—for an applicant that either (a) uses the simplified resale method with 

historic absorption ratio election that wants to revoke its historic absorption ratio election and change to the simplified resale 

method without historic absorption ratio election, or (b) uses the simplified production method with historic absorption ratio 

election that wants to revoke its historic absorption ratio election and change to the simplified production method without 

historic absorption ratio election. This change applies to a taxpayer’s first, second, or third tax year ending on or after November 

20, 2018. See section 12.18 of Rev. Proc. 2022-14.

239 Obsolete.

240 Change in basis of computing reserves (section 807)—for a life insurance company changing the basis of computing any 

item referred to in section 807(c), as described in section 807(f), or a non-life insurance company changing the basis of 

computing life insurance reserves. See section 26.04 of Rev. Proc. 2022-14.

241 Late elections or revocation of elections under sections 168(k)(5), (k)(7), and (k)(10)—for an applicant within the scope 

of Rev. Proc. 2019-33, 2019-34 I.R.B. 662, that wants to make a late election, or to revoke an election, provided in sections 4, 

5, and 6 of Rev. Proc. 2019-33 under section 168(k)(5), (k)(7), or (k)(10). See section 6.18 of Rev. Proc. 2022-14.

242 Changes in timing of income recognition under Proposed Regulations sections 1.451-3 and 1.451-8 (section 451)—

for an accrual method applicant with an applicable financial statement (AFS) that is changing to (a) a method of accounting 

under Proposed Regulations section 1.451-3, or (b) a method of accounting for advance payments under Proposed 

Regulations section 1.451-8(a) or (c). This change is also for an applicant without an AFS that is changing to a method of 

accounting for advance payments under Proposed Regulations section 1.451-8(a) or (d). Note. This change does not apply to 

tax years beginning after December 31, 2020. Some changes may be made on a cut-off basis. See section 16.10 of Rev. Proc. 

2022-14.

243 Late revocation of elections under section 263A(d)(3)—for an eligible small business taxpayer that wants to make a late 

revocation election under section 263A(d)(3) as provided in section 5.02(2)(b) of Rev. Proc. 2020-13. See section 12.19 of Rev. 

Proc. 2022-14. Note. The change under section 12.19 of Rev. Proc. 2022-14 must be made for the taxpayer's first, second, or 

third tax year beginning after the taxpayer's first tax year beginning in 2018.

244 Qualified improvement property placed in service after December 31, 2017 (section 168)—for an applicant that wants to 

change from an impermissible to a permissible method of accounting for depreciation of any item of qualified improvement 

property, as defined in section 168(e)(6), that is placed in service by the taxpayer after December 31, 2017, and that is owned 

by the taxpayer at the beginning of the year of change. An applicant qualifies for a reduced filing requirement. See section 6.19 

of Rev. Proc. 2022-14. 

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245 Certain late elections under sections 168 and 1502 or revocation of certain elections under section 168 (sections 

168(g)(7), (k)(5), (k)(7), and (k)(10); and Regulations sections 1.168(k)-2 and 1.1502-68)—for an applicant within the 

scope of section 4 of Rev. Proc. 2020-25, 2020-19 I.R.B. 785, as modified by section 8 of Rev. Proc. 2020-50, 2020-48 I.R.B. 

1122, that wants to make a late election provided in section 4.02(2) of Rev. Proc. 2020-25 under section 168(g)(7), (k)(5), (k)

(7), or (k)(10). This change also applies to an applicant within the scope of section 5 of Rev. Proc. 2020-25 that wants to revoke 

an election provided in section 5.02(2)(b) of Rev. Proc. 2020-25 under section 168(k)(5), (k)(7), or (k)(10). This change also 

applies to an applicant within the scope of section 5 of Rev. Proc. 2020-50 that wants to make a late election under section 

168(k)(5), (k)(7), or (k)(10); Regulations section 1.168(k)-2(c) (component election); Regulations section 1.1502-68(c)(4) 

(designated transaction election); or Proposed Regulations section 1.168(k)-2(c) (proposed component election) as provided in 

section 5.02(2) of Rev. Proc. 2020-50. Finally, this change also applies to a taxpayer within the scope of section 6 of Rev. Proc. 

2020-50 that wants to revoke an election under section 168(k)(5), (k)(7), or (k)(10); or a proposed component election as 

provided in section 6.02(2)(b) of Rev. Proc. 2020-50. An applicant qualifies for a reduced filing requirement. See section 6.20 of 

Rev. Proc. 2022-14.

246 Change in depreciation as a result of applying the additional first year depreciation regulations (section 168(k) and 

Regulations sections 1.168(k)-2 and 1.1502-68)—This change applies to an applicant within the scope of section 4 of Rev. 

Proc. 2020-50, 2020-48 I.R.B. 1122, that wants to change its method of accounting for depreciation under section 168 from an 

impermissible method to a permissible method to comply with Regulations section 1.168(k)-2 or 1.1502-68, as applicable, for 

depreciable property and specified plants within the scope of section 4 of Rev. Proc. 2020-50. An applicant qualifies for a 

reduced filing requirement. See section 4.03 of Rev. Proc. 2020-50 and section 6.21(3) of Rev. Proc. 2022-14.

247 Change in depreciation as a result of applying the additional first year depreciation regulations (section 168(k) and 

Regulations sections 1.168(k)-2 and 1.1502-68)—This change applies to an applicant within the scope of section 4 of Rev. 

Proc. 2020-50, 2020-48 I.R.B. 1122, that wants to change its method of accounting for depreciation under section 168 from a 

permissible method to another permissible method to comply with Regulations 1.168(k)-2 or 1.1502-68, as applicable, for 

depreciable property and specified plants within the scope of section 4 of Rev. Proc. 2020-50. An applicant qualifies for a 

reduced filing requirement. See section 4.04 of Rev. Proc. 2020-50 and section 6.21(4) of Rev. Proc. 2022-14. Note.This 

change is implemented on a cut-off basis.

248 Depreciation of tangible property under section 168(g) by CFCs—for a CFC (as defined in section 957(a)) that seeks to 

change its method of accounting for depreciation of an item of property that is described in section 168(g)(1)(A) (except for 

property excluded from the application of section 168 as a result of section 168(f)) and owned by the CFC at the beginning of 

the year of change to the permissible depreciation method, convention, and recovery period prescribed under the alternative 

depreciation system in section 168(g) for such property in determining the CFC’s gross and taxable income under section 

1.952-2 as well as its earnings and profits under sections 964 and 986(b) and the regulations thereunder. This change is 

effective for a Form 3115 filed on or after May 11, 2021, for a tax year of a CFC ending before January 1, 2024. See section 

6.22 of Rev. Proc. 2022-14.

249 Timing of incurring liabilities for commissions (section 461)—for an accrual method applicant to treat commissions as 

incurred in the tax year in which all events have occurred that establish the fact of the liability to pay a commission and the 

amount of the liability can be determined with reasonable accuracy. Note. This change does not apply to an applicant that is 

required under section 263A to capitalize the costs with respect to which the applicant wants to change its method of 

accounting if the applicant is not capitalizing these costs, unless the applicant concurrently changes its method to capitalize 

these costs. See section 20.01(4) of Rev. Proc. 2022-14.

250 Changes in timing of income recognition related to Regulations section 1.451-3, other than cost offset (section 451)

—for an accrual method applicant with an applicable financial statement (AFS) to (a) change to comply with Regulations 

section 1.451-3(b) to determine the amount of gross income that is taken into account as AFS revenue by making the AFS 

revenue adjustments provided in Regulations sections 1.451-3(b)(2)(i) or (ii) (including a change for specified credit card fees 

under Regulations sections 1.451-3(j)(2) and 1.1275-2(l)), (b) change to comply with the transaction price allocation rules in 

Regulations section 1.451-3(d), or (c) change to a method described in Regulations section 1.451-3(h)(4) when an applicant’s 

AFS covers mismatched reportable periods. Note. Some changes related to inventory sales may require netting of section 

481(a) adjustments. A change to make the AFS revenue adjustments provided in Regulations sections 1.451-3(b)(2)(i) or (ii) 

applies only to tax years beginning before January 1, 2021, and to the applicant’s first, second, or third tax year beginning after 

December 31, 2020. See section 16.10 of Rev. Proc. 2022-14.

251 Changes in timing of income recognition related to cost offset, except concurrent cost-offset related inventory 

method changes (section 451)—for an accrual method applicant with an AFS to (a) apply or (b) not apply a cost offset 

method to determine the amount of an item of gross income from the sale of inventory that is required to be included in gross 

income under the AFS income inclusion rule in Regulations section 1.451-3(b). Note. An applicant that also needs to comply 

with Regulations section 1.451-3(c)(5)(ii) as a result of a concurrent cost-offset related inventory method may also need to 

make a change under DCN 255 for the same year of change. Some changes related to inventory sales may require netting of 

section 481(a) adjustments. See section 16.10 of Rev. Proc. 2022-14.

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No. Change

252 Changes in timing of income recognition related to the deferral method for advance payments (section 451)—for an 

applicant with an AFS to change to (a) the deferral method provided in Regulations section 1.451-8(c), (b) the specified goods 

method described in Regulations section 1.451-8(f) when accounting for advance payments using the deferral method, (c) a 

method described in Regulations section 1.451-8(c)(7) when an applicant’s AFS covers mismatched reporting periods, or (d) 

comply with the payment allocation rules in Regulations section 1.451-8(c)(8). This change is also for applicants without an AFS 

to change to (a) the deferral method provided in Regulations section 1.451-8(d)(3), or (b) a payment allocation method 

described in Regulations section 1.451-8(d)(4)(ii). Note. Some changes related to inventory sales may require netting of 

section 481(a) adjustments. See section 16.10 of Rev. Proc. 2022-14.

253 Changes in timing of income recognition related to advance payment cost offset, except concurrent cost-offset 

related inventory method changes (section 451)—for an applicant with or without an AFS to change to (a) apply or (b) not 

apply an advance payment cost offset method to determine the amount of an advance payment from the sale of inventory that 

is required to be included in gross income under either the full inclusion method in Regulations section 1.451-8(b) or the 

deferral method in Regulations section 1.451-8(c), as applicable. Note. An applicant that also needs to comply with 

Regulations section 1.451-8(e)(8)(ii) as a result of a concurrent cost-offset related inventory method change may also need to 

make a change under DCN 255 for the same year of change. Some changes related to inventory sales may require netting of 

section 481(a) adjustments. See section 16.10 of Rev. Proc. 2022-14.

254 Changes in timing of income recognition related to the full inclusion method (section 451)—for an applicant to change 

to the full inclusion method provided in Regulations section 1.451-8(b) or, in the case of an applicant with an AFS, to change to

the specified goods method described in Regulations section 1.451-8(f) when accounting for advance payments using the full 

inclusion method. Note. Some changes related to inventory sales may require netting of section 481(a) adjustments. See 

section 16.10 of Rev. Proc. 2022-14.

255 Changes in timing of income recognition related to cost offsets resulting from concurrent cost-offset related 

inventory method changes (section 451)—for an applicant with an AFS to change to comply with Regulations section 

1.451-3(c)(5)(ii) or Regulations section 1.451-8(e)(8)(ii) as a result of a concurrent cost-offset related inventory method change 

or because the applicant determines its cost of goods in progress offset by reference to costs that the applicant has 

impermissibly capitalized and/or allocated under its present method of accounting. This change also applies to an applicant 

without an AFS to change to comply with Regulations section 1.451-8(e)(8)(ii) as a result of a concurrent cost-offset related 

inventory method change or because the applicant determines its cost of goods in progress offset by reference to costs that the 

applicant has impermissibly capitalized and/or allocated under its present method of accounting. Note. An applicant that makes 

more than one change under DCN 255 for the same year of change may be required to net the section 481(a) adjustments in 

certain circumstances. This change requires a section 481(a) adjustment spread period that mirrors a corresponding cost-offset 

related inventory method change. In very limited situations, this change may be made on an amended return. See section 16.10 

of Rev. Proc. 2022-14.

256 Timing of incurring inventory costs (section 461)—for an accrual method applicant to change its method for one or more 

inventory costs to treat such costs as incurred in accordance with Regulations sections 1.461-1(a)(2) and 1.461-4(d)(4) if 

certain conditions are met. This change must be made for an applicant’s early application year, or, if the applicant does not 

apply Regulations section 1.451-3 and/or 1.451-8 for a tax year prior to January 1, 2021, for the applicant’s first tax year 

beginning on or after January 1, 2021. See section 20.13 of Rev. Proc. 2022-14.

257 Change in overall method from the cash method to an accrual method for the mandatory section 448 year (section 

446)—for an applicant that is required by section 448 to change from the overall cash method to an overall accrual method in 

the applicant’s mandatory section 448 year. See section 15.01 of Rev. Proc. 2022-14.

258 Change in overall method from the cash method to an accrual method for a taxpayer subject to section 447 (section 

446)—for an applicant subject to section 447 that is required by section 447 to change from the overall cash method to an 

overall accrual method. See section 15.01 of Rev. Proc. 2022-14.

259 Accrual method for inventories, and the cash method for computing all other items of income and expense (section 

446)— for a qualifying applicant with average annual gross receipts of $25 million or less (adjusted for inflation) changing to an 

accounting method 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. Complete certain lines of Schedule A, Part I, of Form 

3115. See section 15.17 of Rev. Proc. 2022-14

260 Inventory exception for a small business taxpayer (section 471)—for a qualifying applicant with average annual gross 

receipts of $25 million or less (adjusted for inflation) changing its section 471 inventory method to the section 471(c) NIMS 

inventory method provided in Regulations section 1.471-1(b)(4). See section 22.18 of Rev. Proc. 2022-14.

261 Inventory exception for a small business taxpayer (section 471)—for a qualifying applicant with average annual gross 

receipts of $25 million or less (adjusted for inflation) changing its accounting method for inventory items under section 471 to

one of the following methods: (a) the AFS section 471(c) inventory method provided in Regulations section 1.471-1(b)(5), for 

taxpayers with an AFS, as defined in Regulations section 1.471(b)(5)(ii); or (b) the non-AFS section 471(c) inventory method 

provided in Regulations section 1.471-1(b)(6), for taxpayers that do not have an AFS. See section 22.18 of Rev. Proc. 2022-14.

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List of DCNs

No. Change

262 Changes within a section 471(c) inventory method—for a qualifying applicant with average annual gross receipts of $25 

million or less (adjusted for inflation) making changes within a section 471(c) inventory method. See section 22.19 of Rev. 

Proc. 2022-14. Note. This change does not receive audit protection. Additionally, reduced Form 3115 filing requirements apply 

to this change.

263 Change from a small business taxpayer section 471(c) inventory method to an inventory method under section 

471(a)—for a qualifying applicant with average annual gross receipts of $25 million or less (adjusted for inflation) changing 

from using a small business taxpayer inventory method under section 471(c) inventory method to an inventory method under 

section 471(a). See section 22.20 of Rev. Proc. 2022-14.

264 Certain late elections under sections 168(j)(3), 168(l)(3)(D), and 181(a)(1)—for an applicant making a late election (1) not 

to apply section 168(j) for qualified Indian reservation property placed in service after December 31, 2017, for its 2018 or 2019 

tax year; (2) not to apply section 168(l) for qualified second generation biofuel plant property placed in service after December 

31, 2017, for its 2018 or 2019 tax year; or (3) to apply section 181 to the production costs for its 2018 or 2019 tax year of any 

qualified film, television, or live theatrical production, commenced by the taxpayer after December 31, 2017. See section 6.23 of 

Rev. Proc. 2022-14.

265 Research and experimental expenditures (section 174)—to charging specified research or experimental expenditures to 

capital account and amortizing such expenditures over a 5- or 15-year period, as applicable. See section 7.02 of Rev. Proc. 

2022-14. Note. For specified research or experimental expenditures paid or incurred in the first tax year beginning after 

December 31, 2021, this change is implemented on a cut-off basis. For specified research or experimental expenditures paid or 

incurred in any year of change later than the first tax year beginning after December 31, 2021, this change is implemented with 

a modified section 481(a) adjustment. This change applies to amounts paid or incurred in tax years beginning after December 

31, 2021. For amounts paid or incurred in tax years beginning before January 1, 2022, see DCN 17.

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Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United 

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burden for all other taxpayers who file this form is shown below.

Time Per Response

Recordkeeping ............... 60 hours, 58 minutes

Learning ................... 17 hours, 25 minutes

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If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be 

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