Source: https://www.currentfederaltaxdevelopments.com/blog/2019/2/5/taxpayers-using-impermissible-method-can-use-revenue-procedure-2018-60-to-convert-automatically-to-a-permitted-method
Timestamp: 2019-04-21 12:37:42+00:00

Document:
Rev. Proc. 2018-60 was released by the IRS to allow taxpayers to obtain consent to change from their current method of accounting to take into account the requirements of IRC §451(b)(1)(A), added by the Tax Cuts and Jobs Act, effective for tax years beginning in 2018. But is that automatic change still available if the method the taxpayer had previously been using was one not allowed for tax purposes?
In CCA 201852019 the IRS Chief Counsel’s office decided the answer was yes.
(ii) such other financial statement as the Secretary may specify for purposes of this subsection.
Taxpayer is an accrual method taxpayer with an applicable financial statement that files its tax return on a calendar year basis. Taxpayer proposes to adopt a method under Rev. Proc. 2018-60 to comply with § 451(b), as amended by section 13221 of the Tax Cuts and Jobs Act, Pub. L. No. 115-97 (December 22, 2017)(TCJA). Taxpayer’s present method of accounting is an impermissible method that does not comply with either the all events test of § 451, as amended by the TCJA or with § 451, prior to being amended by the TCJA.
Rev. Proc. 2018-60 provides automatic consent for method changes to comply with § 451(b)(1)(A), as amended by the TCJA. The operative rule set forth in § 451(b)(1)(A) includes the requirements of the all events test under § 451(b)(1)(C). Thus, to satisfy § 451(b)(1)(A), a taxpayer must also comply with the all events test as defined in § 451(b)(1)(C).
Accordingly, a taxpayer that complies with all the terms and conditions set forth in Rev. Proc. 2018-60, may obtain automatic consent of the Commissioner to change from a method that is impermissible under § 451(b)(1)(C) to a permissible method that complies with § 451(b)(1)(A), as amended by TCJA.
Note that the taxpayer in this case will not be allowed to use its prior inappropriate tax method for cases where the AFS may still use that old method to slow recognition of revenue for tax purposes. Rather, for tax purposes the taxpayer will need to move to a correct application of the all events test in those cases.
It seems possible, based on this analysis, that this result would be available even if the taxpayer’s AFS never creates a situation where a more rapid recognition would be required—thus creating an opportunity for a taxpayer to obtain automatic permission to change from an otherwise impermissible method of recognizing revenue in cases where the all events test would normally apply.

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