Did the IRS recently change its procedures for Accounting Method Changes in connection to Tangible Property?
Tax Professional Answers
Yes, The Internal Revenue Service (hereinafter the “Service”) has modified its procedures for obtaining automatic consent to make certain changes in the methods of accounting for amounts paid to acquire, produce or improve tangible property.
In September of 2013, the Service and the Department of Treasury released a set of long-awaited final treasury regulations governing tangible property. The final treasury regulations require that a taxpayer seeking an accounting method change receive the consent of the Service.
Recently issued Revenue Procedure 2014-16 provides procedures for obtaining an automatic consent to change to a reasonable method of accounting described in Treas. Regs. § 1.263A-1(f)(4) for self-constructed assets, and a permissible method under I.R.C. § 263A(b)(2) and I.R.C. § 1.263A-3(a)(1) for certain costs related to real property acquired through a foreclosure or similar transaction.
It should be duly noted that the new rules modify and clarify Rev. Proc. 2011-14 and supersede Rev. Proc. 2012-19.
Please contact me should you need any further clarification.
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