Form 3115 (Rev. 1-89) Page 5

Section E. Change in Method of Reporting Income From Long-Term Contracts

Note: Also complete section D.

1 Are your contracts long-term contracts as defined in section 460? . Lee ee ee Yes OF No
2 Does the change involve any pre-March 1, 1986 contracts?. . . . . .0 Yes O No
3 Will the taxpayer elect the simplified cost-to-cost method for determining the degree of contract completion? 5 Yes (] No
4 Is the same method used for reporting all long-term contracts regardless of duration? . . . . . 1 + ss Yes [ No
If “No,” explain.
5 Doany (orall) of your contracts qualify for the small construction contract exception under section
If “Yes” or “All,” please provide a separate cost allocation worksheet (Section D) for such contracts.
6 Is the change in method requested for all contracts outstanding at the beginning of the tax year of change? O Yes 0 No
If “No,” explain. _
7 Doyou have either cost-plus long-term contracts or Federal long-term contracts? . . . O Yes O No
If “Yes,” please provide the information in items 2 through 6 above and complete the chart it in Section D
separately for such contracts.
8 Net adjustment required under section 481(a) . . oo ls

Section F. Change in Method of Reporting Interest (Discount) o on Installment and Other Loans

1 Change with respect to interest on L Installment loans, [1 Commercial loans, and [] Other loans (explain) > _

2 Doany of these loans cover a period in excess of 60 months? . . . woe ee we). OF Yes OF No
If “Yes,” please attach an explanation. (See Rev. Rul. 83-84 and Rev. Proc. 83. “40. )
If you wish to change from the sum of the months digits method (rule of 78's) to the economic accrual of interest method for reporting
interest (discount) under Rev. Rul. 83-84, see Rev. Procs. 84-27, 84-28, 84-29, and 84-30.

3 Amount of earned or realized interest that has not been reported on your return as of the end of the tax year
preceding the yearofchange. . . . Soe

4 Amount of unearned or unrealized interest that has been reported o on your return a as of the end of the tax year
preceding the year of change. ‘ cr ry wee

5 __ Method of rebating in event of prepayment of loans >

Section G. Change in Method of Accounting for Depreciation Under Section 167

Applicants desiring to change their method of accounting for depreciation under section 167 must complete this section. This information
must be supplied for each account for which a change is requested. Note: Certain changes in methods of accounting for depreciation may
be filed with the Service Center where your return will be filed. See Rev. Proc. 74-11 for the methods covered. For information regarding
elections and election revocations under section 168, see the Specific Instructions for Section G.

1
2a

Date of acquisition m oo... 2... eee eee ee eee eee ene nena ee ec ee nce eeeeeeneeesegeeteeereeserees

Are you the original owner or the first user of the property? Coe ee ee ee eee. . OF Yes O01 No
If residential property, did you live in the home before renting it? woe ee ee ee ee ee . . Yes 2 No
Is depreciation claimed under Regulations section 1.167(a)-11(CLADR)? . . . . . ....O2 Yes 1 No

If Yes,” the only changes permitted are under Regulations section 1.167(a)- 11E@UAMiiD. Identity these changes ‘on the tax return
for the year of change.

ls the property public utility property? .
Location of the property (city and state) > _
Type or character of the property 8c eee ee cee ene eee ee ee cece eee eee e eee e cece e cece eeeeceeeeees

Cost or other basis of the property and adjustments thereto(excludeland) . 2 2... 1. ee ee LS
Depreciation claimed in prior tax years (depreciation reserve) . 2 2 1 2 ee ee ee ee PH
Estimated salvage value ry

Estimated remaining useful life of the property >.
If the declining balance method is requested, show percentage of straight-line rate >
Other information, if any >



Form 3115 (Rev. 1-89)

Page 4

Section D. Method of Cost Allocation

Complete this section if the requested change involves either property produced, property acquired for resale, or long-term contracts.
Please check (L“) the appropriate boxes in Parts | and II showing which costs are included, under both the present and proposed methods,
in the cost of the property produced or acquired for resale under section 263A and allocated to long-term contracts under section 460. If
any boxes are not checked, it is assumed that these costs are excluded. Please mark “N/A” in boxes for costs that are not incurred by the
taxpayer. If you are presently including only a portion of a type of cost, enter “P” in the appropriate box instead of (~).

Direct and Indirect Costs

(Required to be allocated—see Temporary Regulations section 1.263A—1T(b)(2)(i-iv))

Federal income tax purposes

Present method

Proposed method

ee
BPOwMmVNaubrwne

”
i

13
14
15
16
17
18
19
20
21
22
23
24
25

26
27

Direct material

Direct labor

Repairs that relate toa production, resale, or long: term contract. activity .

Maintenance .

Utilities .

Rent.

Indirect labor and production s supervisory wages .

Indirect materials and supplies

Tools and equipment

Quality control and inspection.

Taxes other than state, local, and foreign in income taxes. .

Depreciation, amortization, and cost recovery allowance for eauipment and facilities paced in
service and not temporarily idle . tone sone cone coe
Depletion .

Administrative costs (but not including @ any costs of selling. orany y return on capital)

Direct or indirect costs of other administrative, service, or support function or department .

Officers’ compensation (not including sellingactivities) . . . 2... 1. ee ee
Insurance .

Employee benefits

Research and experimental expenses attributable to long: term contracts .

Rework labor, scrap, and spoilage

Bidding expenses incurred in the solicitation of particular contracts ultimately awarded to the taxpayer
Engineering and design costs (not including section 174 research and experimental expenses) .
Storage and warehousing costs including a portion of allocable general and administrative costs**.
Purchasing costs including a portion of allocable general and administrativecosts. . . . . . .
Handling, processing, assembly, and repackaging costs including a portion of allocable general and
administrative costs . OY
Interest. 2 2. Y
Other costs (Attach a list of such costs. ) :

** Resalers may distinguish between off-site and on- site ‘storage, and are not required to capitalize
on-site storage costs. Check this box if you are a resaler allocating only off-site storage costs. _.» (]

Included (1

Included ()

glaaiy Other Costs

(Not required to be allocated—see Temporary Regulations section 1.263A-1T(b)(2)(v))

aawne

aco NI

1

2

3

Repairs that do not relate to a production, resale, or long-term contract activity .

Research and experimental expenses not included on line 19, Part!

Bidding expenses not included on line 21, Part! .

Marketing, selling, advertising, and distribution expenses .

General and administrative costs attributable to the performance of services s that ‘do not directly
benefit or are not incurred by reason of a particular production, resale, or long-term contract activity .
Income taxes .

Cost of strikes. .
Other costs (Attach a list of such costs, )

Elagus Additional Information

Method of allocating indirect costs:

O Specific identification 1] Standard cost method [1] Burden rate (attach explanation) oOo Other (attach explanation)
Method of allocating service costs: O Direct O Step allocation

C1 Other (explain)
Taxpayers subject t i .

ppropriate box(es) to i

e simplified method(s), if any, presently used:

OO Simplified resale method OO Simplified production method CO Simplified service cost method

O Alternative simplified resale method O other (explain)



Form 3115 (Rev. 1-89) Page 6
Section H. Change in Method of Accounting Not Listed Above (See Specific Instructions for Section H.)

Signature—All Filers (See instructions.)

Under penalties of perjury, | declare that | have examined this application, including accompanying schedules and statements, and to the best of my knowledge and
belief, itis true, correct, and complete. Declaration of preparer (other than applicant) is based on all information of which preparer has any knowledge.

‘Signature of individual or firm preparing the application Date



rom 3115 Application for Change in Accounting Method OMB No. 1545-0152

(Rev. January 1989)

Department of the Treasury , / Expires 9-30-91
Internal Revenue Service > See separate instructions.

Name of applicant (if joint return is filed, also give spouse’s name) Identifying number (see instructions)
Address (number and street) Applicant's area code and telephone number
¢ )
City or town, state, and ZIP code District Director's office having junsdiction
Name of person to contact (Please type or print.) Contact person’s area code and telephone number
¢ )
If power of attorney is applicable, check box if your representative has enclosed one (Form 2848, Power of Attorney and Declaration of
Representative) withForm3115 .. . . an .... . .f1Yes [No
Check one: (J Individual 1 Partnership; No. of Partners _______ ‘Oo Corporation o "s Corporation; No. of Shareholders__________
CO Cooperative (Section 1381(a)) [) Ins. Co. (Sec. 801) [1 Ins. Co. (Sec. 831) [1 Qualified Personal Service Corporation
Exempt organization. Enter code section > (See section 448.)

1 Other (specify) >

NOTE: Are you making an election ‘under section Se ee ee
If ‘Yes,’ see Specific Instructions for Section H. Do not fillin Section Alf “No,” you must complete Section A.

Section A. Applicable to All Filers Other Than Those Answering “Yes” to the “Note” Above

la Tax year of change begins (mo., day, yr.)P _____ eee and ends (mo., day, yr.) _--

b Enter the 180th day of your tax year > _.__ If this date is earlier than the date you signed this Form 3115 on page 6,
see General Instruction for “Late Applications” before going on.

2 Nature of business and principal source of income (including type of business designated on your latest income tax return) >

. 1 Yes [No

3 The following change in accounting method is requested (check and complete appropriate spaces):
a [1 Overall method of accounting: from > to
If the taxpayer is requesting a change to the accrual method, see section 448, Temporary Regulations section 1. 448- -IT, Rev. Proc. 85-36 and Rev. Proc. 85-37.
b 1 The accounting treatment of (identify item) >
from (present method) > . to(new method) >
Attach a separate statement providing all relevant facts, including a detailed description of your present and proposed methods.
See also item 15 of Section A on page 2 regarding the “legal basis” for the proposed change.
If a change is requested under 3b above, check the present overall method of accounting:
O Accrual ([] Cash [1 Hybrid (Explain the overall hybrid method in detail in a separate statement.) Yes | No
Is your use of your present method specifically not permitted by the Internal Revenue Code, the Income Tax Regulations, Ms
or by a decision of the U.S. Supreme Court? See sections 4, 5, and 6 of Rev. Proc. 84-74 . . .

Is the requested change specifically required by the Tax Reform Act of 1986 or the Revenue Act of 1987? fa
Are you currently under examination, or were you or any member of the affiliated group contacted in any manner by a
representative of the Internal Revenue Service for the purpose of scheduling an examination of your Federal tax Yj,
return(s) prior to the filing of this application, or do you have an examination under consideration by an appeals officer or Ms
before any Federal court, or is any criminal investigation pending? See sections 4 through 7 of Rev. Proc. 84-74

Are you a taxpayer that produces property or acquires property for resale to whom section 263A applies? If “Yes” and
item to be changed is subject to section 263A, section D must be completed .

Are you a manufacturer to whom Income Tax Regulation section 1.471-11 applies? . :
4a In the last 6 years have you requested permission to change or have you changed your accounting period, ‘your overall
method of accounting, or the accounting treatment of any item? (Affiliated group members filing a consolidated return, My
see item 8e on page 2.) . an .
If 4a is “Yes,” was a ruling letter granting permission to make the change issued? If "Yes" and the change was made, Mh
attach a copy of the letter. If permission was granted, but you did not make the change, attach an explanation .
Regardless of your response to 4a, do you or an affiliated corporation have pending any accounting method or period Uh
ruling or technical advice request in the National Office? . . . oe te

d If 4cis “Yes,” indicate the type of request (method, period, etc.) and the specific i issue involved i in each request >

o

a

oa

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5 If engaged in a business or profession: ome or (loss)* from ope!
years preceding the year of change: (See Specific Instructions for Section A.)

jostended. Bo. ye ec yt | seatancca’ Bo yt year ended: Bo, ye year ended Bo, ye
$ [s [$ $ $

b Enter the amount of net operating loss to be carried over to the year of change, ifany. . . . . . . $

¢ Amount of general business credit carryover to year ofchange,ifany. . . . . .... eee $

d Other credit carryover, if any. (Identify) >

‘Individuals enter net profit or (loss) from business; partnerships enter ordinary income or (loss), members of an affiliated group filing a consolidated return see item 8b on page 2
For Paperwork Reduction Act Notice, see separate instructions. Form 3115 (Rev. 1-89)



Form 3115 (Rev. 1-89)

Page 2

6

Gross receipts for the three (3) tax years preceding the year of change. (See Specific Instructions for Section A.)
1st preceding ‘2nd preceding 3rd preceding

year ended: mo, ve year ended: ro ye yeatended: rho yt

$ $ $

7a Do you have more than one trade or business? .

b If 7ais “Yes,” do you account for each trade or business separately? If “Yes,” see Specific Instructions for Section A for

additional information that must be provided

8a Is applicant a member of an affiliated group filing a consolidated return for the tax year of change?. . . .

ov

o

If 8a is “Yes,” state parent corporation’s name, identifying number, address, tax year, and Service Center where return
is filed, and provide the information requested in item 5 on a consolidated basis > _

If 8a is “Yes,” do all other members of the affiliated group employ the method of accounting for which the change is requested?
If “No,” explain >

d If 8a is “Yes,” are any of the items involved in the calculation of the net section 481(a) adjustment attributable to

transactions between members of the affiliated group? If “Yes,” attach explanation .

e If 8a is “Yes,” provide the information requested in items 4a, 4b, 4c, and 4d for each member of the affiliated group.
9a Is applicant a member of an affiliated group not filing a consolidated return for the tax year of change? .

10

11

12
13

14

15

b If 9a is “Yes,” are any of the items involved in the calculation of the net section 481(a) adjustment attributable to

transactions between members of the affiliated group or other related parties? If “Yes,” attach explanation

If change is granted, will the new method be used for financial reporting purposes?. . . . . 2... we
If “No,” attach an explanation. Such explanation should include a discussion of whether your new method of accounting
conforms to generally accepted accounting principles and why it will clearly reflect income.

Yes

No

Enter the net section 481(a) adjustment for the | Atthe beginning ofthe |At the beginning of the At the beginning of the At the beginning of the
year of change, and the net section 481(a) | yearofchange ended, | 1st preceding year ended,| 2nd preceding year ended, | 3rd preceding year ended,

adjustment that would have been required if the | emter'mo. yr. enter:mo. Yt enter:mo. yt. enter: mo.

yr.

requested change had been made for each of the 3
tax years preceding the year of change. (See
Specific Instructions forSectionA.) .. . . $ $ $

Has net adjustment under section 481(a) for the year of change been reduced in any way by a pre-1954 amount?
Number of tax years present method has been used for which the change is requested in item 3a or 3b. (See Specific
Instructions for Section A.) >

Has your present method been designated by a Rev. Rul. or Rev. Proc. more than 2 years before filing this form as a
change in method of accounting to which section 5.12(2) of Rev. Proc. 84-74 applies? . :

Mi

State the reason(s) including the legal basis (statutes, regulation, published rulings, etc.) why you believe approval to make this

change should be granted. See section 7 of Rev. Proc. 84-74.

Section B-1. Change in Overall Method of Accounting

1 The following amounts should be stated as of the end of the tax year preceding the year of change. If none, state ‘‘None.”’ (Although
some of the items listed below may not have been required in the computation of your taxable income due to your present method of
accounting, it is necessary that they be entered here for this form to be complete. Show the net section 481(a) adjustment
attributable to long-term contracts on line 8, Section E, page 5.) Provide on a schedule the breakdown of the individual items which
make up the “Amount” for lines 1a through 1g. See section 448, Temporary Regulations section 1.448-1T, Rev. Proc. 85-36, and

Rev. Proc. 85-37 for rules to change to the accrual method expeditiously.

Show by (1) how treated on last year's return:

a Income accrued but not received . . . . $

Amount Included in income or Excluded from income or
deducted as expense not deducted as expense

'b Income received before the date on which it was earned. State

nature of income. If discount on installment loans, see Section
F on page 5. For advance payments for goods and services, see
Specific Instructions for Section B-1. >

c Expenses accrued but not paid .
d Other (specify) > __ _
e Prepaid expense previously deducted .
f Supplies on hand previously deducted.
glInventoryonhand. . . . . $
Inventory reported on your return
valued in accordance with section 263A, .
if applicable . $
Difference.

\NN

bh Net section 481(a) adjustment (combine lines 1a through 1g) [$

SS


Form 3115 (Rev. 1-89) Page 3

2 Nature of inventory

3 Method used to value invento Cost [1 Cost or market, whichever islower [1 Other (attach explanation)

4 Method of identifying costs in inventory: O Specific identification O FIFO. CO LIFO

5 Have any receivables been sold in the past 3 | 1st preceding year ended, 2nd preceding year ended, 3rd preceding year ended,
years?. . . . .. Des CNo |_enter:mo. yr enter:mo. yr. enter: mo. yr

If “Yes,” enter the amounts sold for each of the
B3years . . . $ $ $

6 Attach copies of profit and loss statement (Schedule F (Form 1040) in the case of farmers) and balance sheet, if applicable, as of the close of
the tax year preceding the year of change. State accounting method used when preparing balance sheet. If books of account are not kept,
attach copy of the business schedule provided with your Federal income tax return or return of income for that period. If amounts in item 1
Section B-1, page 2, do not agree with those shown on profit and loss statement and balance sheet, explain on separate page.

Section B-2. Change to the Cash Method of Accounting (Farmers complete Section B-3 instead of this section.)

Note: Also complete section B-1.
1 Provide a detailed statement describing the nature of the taxpayer's business. Describe the operations, services performed, and the
types of activities, if more than one.
Provide a description of the taxpayer's investment in capital items and leased equipment used in the taxpayer's trade or business, and
the relationship between these items and the services performed by the business.
Provide a description of any inventory item (goods, the sale of which produces income) and any materials and supplies used in carrying out the business.
Provide the number of employees, shareholders, partners, associates, etc., and a description of their duties in carrying out the taxpayer's business.
Provide a schedule showing the age of receivables for the year of change and the 3 tax years preceding the year of change.

Provide a profit and loss statement computed on the cash receipts and disbursements method for the year of change and the 3 tax
years preceding the year of change.

Section B-3. Change in Overall Method of Reporting Income of Farmers to Cash Receipts and Disbursements Method
Note: Also complete Section B-1.

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annaw

1 Isthetaxpayeracorporation?. . . . Soe ee ee ee ee ew we ee». OF Yes 1 No
2 Is the taxpayer a partnership with a corporation as asa ‘partner? oe O Yes OO No
3 If either 1 or 2 is “Yes,” has the taxpayer had gross receipts of $1, 000, 000 or less | in ‘each of its tax years
beginning after1975?. . . . . +... Yes OO No
If “No,” attach a schedule showing w which years. isthe taxpayer's 's receipts were more than $1, 000; 000.
4a Does the taxpayer produce property with a preproductive period of more than2 years? . . . . O Yes O No

b If 4a is “Yes,” has the taxpayer or related party made an election out of section 263A for any trade. or business? . O Yes O No
c lf 4b is “Yes,” explain.
5 Provide the following information for the 5 tax years before the year of change:
Ist preceding yr. ‘2nd preceding yr. 3rd preceding yr. “Ath preceding yr. 5th preceding yr.

a Gross receipts from farming .
b Inventory: Crops, etc. .
Livestock held for sale:
Purchased
Raised . . .
Livestock held for draft breeding,
sport, or dairy purposes:
Purchased

Raised.
Total inventory .

6 Method used to value inventory (check appropriate box):

1 Cost) Cost or market, whichever is lower__[]_Farm price_[]_Unit livestock price _ [1] Other (explain on separate page)
Section C. Change in Method of Valuing Inventories. (See Specific Instructions for Section C.)

Note: Also complete Section D.
1 Description of inventory goods being changed >
Description of inventory (if any) not being changed > _
3. Present method of identifying costs in inventory: [1 Specificidentification [1 FIFO O LIFO
If “LIFO,” attach copy of Form 970 adopting that method and copies of any Forms 970 filed to extend the use of the method.
4 Present method used to value inventory: [1 Cost [1 Cost or market, whichever is lower [] Retail cost
C. Retail, lower of cost or market [1 Other (attach explanation)
5 Show method and value of the inventories being changed at the end of the tax year preceding the year of change under:
a Present method >

b Proposed method >
c If changing to cost method, are you going to elect LIFO for identifying costs? . . . . . . .
6 Attach the computation used to arrive at the section 481 adjustment.

i)