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Department of the Treasury
Internal Revenue Service
Instructions for Form 3115

(Rev. December 2022)

Application for Change in Accounting Method

Section references are to the Internal Revenue Code unless Automatic change procedures. Unless otherwise provided in
otherwise noted. published guidance, you must file under the automatic change
All references to Rev. Proc. 2015-13 are to Rev. Proc. procedures if you are eligible to request consent to make an
accounting method change under the automatic change
CAUTION Rev. Proc. 2015-33, 2015-24 I.R.B. 1067, and as
! 2015-13, 2015-5 I.R.B. 419 (as clarified and modified by procedures for the requested year of change. See the
modified by Rev. Proc. 2021-34, 2021-35 I.R.B. 337; Rev. Proc. instructions for Part I Information for Automatic Change Request,
2021-26, 2021-22 I.R.B. 116; by Rev. Proc. 2017-59, 2017-48 later, and the List of Automatic Changes in Rev. Proc. 2022-14.
I.R.B. 543, and section 17.02 of Rev. Proc. 2016-1, 2016-1 No user fee is required for a Form 3115 filed under the
I.R.B. 1), or any successor. automatic change procedures. An applicant that timely files and
complies with the automatic change procedures is granted
All references to Rev. Proc. 2022-14 and the List of Automatic consent to change its accounting method, subject to review by
Changes are to Rev. Proc. 2022-14, 2022-7 I.R.B. 502 (as the IRS National Office and operating division director. If it is
modified by Rev. Proc. 2022-23, 2022-18 I.R.B. 105 and Rev. reviewed by the IRS, you will be notified if information in addition
Proc. 2023-11, 2023-3 I.R.B. 417) or any successor. to that requested on Form 3115 is required or if your request is
denied. Ordinarily, you are required to file a separate Form 3115
All references to Rev. Proc. 2023-1 are to Rev. Proc. 2023-1, for each accounting method change. However, in some cases,
2023-1 I.R.B. 1, or any successor (updated annually). you are required or permitted to file a single Form 3115 for
particular concurrent accounting method changes. See section
Future Developments 6.03(1)(b) of Rev. Proc. 2015-13 for more information.
For the latest information about developments related to Form
3115 and its instructions, such as legislation enacted after they Note. The List of DCNs (Designated automatic accounting
were published, go to IRS.gov/Form3115. method change numbers) at the end of these instructions is a list
of many accounting method changes and is presented for
What's New informational purposes only and subject to the most recently
issued revenue procedures.
Changes related to the deferral method for advance pay-
ments, cost offset methods, and/or the applicable financial You may qualify for a reduced Form 3115 filing
statement income inclusion rule. The instructions for TIP requirement for certain DCNs. A reduced Form 3115
Schedule B have been updated to include additional information filing requirement involves completing only certain lines
about accounting method changes relating to the deferral and schedules of Form 3115. For qualifying changes and filing
method for advance payments, cost offset methods, and requirements, see Rev. Proc. 2022-14. For example, qualified
methods to conform to the applicable financial statement (AFS) small taxpayers are eligible for a reduced Form 3115 filing
income inclusion rule under section 451. requirement for DCNs 7, 8, 21, 88, 89, 107, 121, 145, 157,
184-193, 198, 199, 200, 205, 206, 207, and 222.
Research and experimental expenditures. Effective for
specified research or experimental expenditures paid or incurred Non-automatic change procedures. If you do not qualify to
in tax years beginning after 2021, no deduction is allowed for file under the automatic change procedures for the requested
such expenditures. Instead, you must capitalize and amortize accounting method change for the requested year of change,
these amounts over a 5-year period for amounts attributable to you may be able to file under the non-automatic change
domestic research and over a 15-year period for amounts procedures. See Non-automatic change-scope and eligiblity
attributable to foreign research. See DCN 265 and Rev. Proc. rules , under Part III, later. If the requested change is approved
2023-11, 2023-3 I.R.B. 417. 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
General Instructions required. See the instructions for Part III for more information.

Purpose of Form Who Must File
File Form 3115 to request a change in either an overall The filer is the entity or person required to file Form 3115,
accounting method or the accounting treatment of any item. whether on its own behalf or on behalf of another entity. An
applicant is an entity, a person, or a separate and distinct trade
Method Change Procedures or business of an entity or a person (for purposes of Regulations
When filing Form 3115, you must determine if the IRS section 1.446-1(d)), whose accounting method is being
changed.
! has issued any new published guidance which includes
CAUTION revenue procedures, revenue rulings, notices,
For a consolidated group of corporations, the common parent
regulations, or other relevant guidance in the Internal Revenue corporation must file Form 3115 for an accounting method
Bulletin (I.R.B ) For the latest information, go to IRS.gov. change for itself and for any member of the consolidated group.
For general application procedures on requesting accounting For example, the common parent corporation of a consolidated
method changes, see Rev. Proc. 2015-13. Rev. Proc. 2015-13 group is the filer when requesting an accounting method change
provides procedures for both automatic and non-automatic for another member of that consolidated group (or a separate
accounting method changes. and distinct trade or business of that member), and the other

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member (or trade or business) on whose behalf Form 3115 is File Form 3115 with the IRS National Office at the address listed
filed is the applicant. in the Address Chart for Form 3115 below. Alternatively, Form
3115 may be submitted by secure electronic facsimile or
For information on the difference between a filer and an encrypted electronic mail. File Form 3115 as early as possible
applicant, see Name(s) and Signature(s), later. during the year of change to provide adequate time for the IRS to
For information on a controlled foreign corporation (CFC) or respond prior to the due date of the filer's return for the year of
10/50 corporation without a U.S. trade or business, see section change.
6.02(6) of Rev. Proc. 2015-13. The IRS normally sends an acknowledgment of receipt within
Generally, a filer must file a separate Form 3115 for each 60 days after receiving a Form 3115 filed under the
applicant seeking consent to change an accounting method. A non-automatic change procedures. If the filer does not receive
separate Form 3115 and user fee (for non-automatic change an acknowledgment of receipt for a non-automatic change
requests) must be submitted for each applicant and each request within 60 days, the filer can inquire to:
separate trade or business of an applicant, including a qualified Internal Revenue Service
subchapter S subsidiary (QSub) or a single-member limited Control Clerk
liability company (LLC), requesting an accounting method CC:IT&A, Room 4512
change. See section 9.02 of Rev. Proc. 2023-1. 1111 Constitution Ave. NW
However, identical accounting method changes for two or Washington, DC 20224
more of the following in any combination may be included in a
single Form 3115. In specified circumstances, you are required to send
1. Entities with a common sponsor. ! additional copies of Form 3115 to another IRS
CAUTION address. For example, another copy of Form 3115
2. Members of a consolidated group; would be sent when an applicant is under examination, before
3. Separate and distinct trades or businesses (for purposes an Appeals office, or before a federal court, or is a certain foreign
of Regulations section 1.446-1(d)) of that entity or member(s) of corporation or certain foreign partnership. See section 6.03(3) of
a consolidated group. Separate and distinct trades or Rev. Proc. 2015-13 for more information. Also see the
businesses include QSubs and single-member LLCs; instructions for Part II, lines 6 and 8, later.
4. Partnerships that are wholly owned within a consolidated Address Chart for Form 3115
group; and
5. CFCs and 10/50 corporations that do not engage in a File Form 3115 at the applicable IRS address listed below.
trade or business within the United States where (i) all controlling
domestic shareholders (as provided in Regulations section A non-automatic change An automatic change
request request (Form 3115 copy)
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 Delivery by mail Internal Revenue Service Internal Revenue Service
Attn: CC:PA:LPD:TSS Ogden, UT 84201
taxpayer is the sole controlling domestic shareholder of the P.O. Box 7604 M/S 6111
CFCs or of the 10/50 corporations. Benjamin Franklin Station
For information on what is an identical accounting method Washington, DC 20044
change, see section 15.07(4) of Rev. Proc. 2023-1. Delivery by Internal Revenue Service Internal Revenue Service
private delivery Attn: CC:PA:LPD:TSS 1973 N. Rulon White Blvd.
service Room 5336 Ogden, UT 84201
When and Where To File 1111 Constitution Ave. NW Attn: M/S 6111
Automatic change requests. Except if instructed differently, Washington, DC 20224
you must file Form 3115 under the automatic change procedures Delivery by 877-773-4950 (Secure) 844-249-8134
in duplicate as follows. facsimile
• Attach the original Form 3115 to the filer's timely filed Delivery by Userfee@irscounsel.treas. N/A
(including extensions) federal income tax return for the year of encrypted gov
change. The original Form 3115 attachment does not need to be electronic mail
signed.
• File a copy of the signed Form 3115 (duplicate copy) with the
IRS National Office at the address provided in the Address Chart Late Application
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 In general, a filer that fails to timely file a Form 3115 will not be
federal income tax return for the year of change. This signed granted an extension of time to file except in unusual and
Form 3115 may be a photocopy. For more on the signature compelling circumstances. See section 6.03(4)(b) of Rev. Proc.
requirement, see Name(s) and Signature(s), later. Alternatively, 2015-13 and Regulations section 301.9100-3 for the standards
the duplicate copy of the signed Form 3115 may be submitted by that must be met. For information on the period of limitations,
fax. see section 5.03(2) of Rev. Proc. 2023-1.
The IRS does not send acknowledgements of receipt for However, an automatic 6-month extension from the due date
automatic change requests. (excluding any extension) of the federal income tax return to file
Form 3115 may be available for automatic change requests. For
For filing procedures relating to automatic change details, see section 6.03(4)(a) of Rev. Proc. 2015-13, and
TIP requests for certain foreign corporations and foreign Regulations section 301.9100-2.
partnerships, see section 6.03(1)(a)(ii) and (iii) of Rev.
Proc. 2015-13. An applicant submitting a ruling request for an extension of
time to file Form 3115 must pay a user fee for its extension
Non-automatic change requests. You must file Form 3115 request and, in the case of a non-automatic change request, a
under the non-automatic change procedures during the tax year separate user fee for its accounting method change request. For
for which the change is requested, unless otherwise provided by the schedule of user fees, see section (A)(3)(b), (A)(4), and (A)
published guidance. See section 6.03(2) of Rev. Proc. 2015-13. (5)(d) in Appendix A of Rev. Proc. 2023-1.

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Useful Items Non-consolidated corporations, personal service corpora-
Refer to the following items for more information on changing an tions, S corporations, and cooperatives. Enter the name of
accounting method. the filer on the first line of Form 3115. In the signature section,
enter the signature of the officer who has personal knowledge of
Rev. Proc. 2023-1. See Rev. Proc. 2023-1. This revenue the facts and authority to bind the filer in the matter. Enter that
procedure provides specific and additional procedures for officer's name and official title in the space provided.
requesting an accounting method change, including the user fee
for non-automatic method of change requests. Consolidated group of corporations. Enter the name of the
common parent corporation on the first line of Form 3115. Also
Rev. Proc. 2015-13. See Rev. Proc. 2015-13. This revenue enter the name(s) of the applicant(s) on the fourth line if a
procedure provides the automatic and non-automatic method member of the consolidated group other than, or in addition to,
change procedures to obtain consent of the IRS to change an the parent corporation is requesting an accounting method
accounting method. change. In the signature section, enter the signature of the
Rev. Proc. 2022-14. See Rev. Proc. 2022-14. This revenue officer of the common parent corporation who has personal
procedure contains a list of accounting method changes that knowledge of the facts and authority to bind the common parent
may be eligible to file under the automatic method change corporation in the matter, and that officer's name and official title
procedures. in the space provided.
Inflation-adjusted amount. Certain automatic accounting Multiple entities with a common sponsor. Enter the name of
method changes require that the applicant’s average annual the common sponsor on the first line of Form 3115. Enter on the
gross receipts for the 3 preceding tax years be at or less than the fourth line the name of each entity with the common sponsor that
“inflation-adjusted amount” (set forth in an annual revenue is requesting an accounting method change. In the signature
procedure) See, for example, DCN 22. For years beginning in section, enter the signature of the officer who has personal
2022, the inflation adjusted amount is $27,000,000. See Rev. knowledge of the facts and authority to bind the common
Proc. 2021-45. sponsor and the applicants with that common sponsor in the
matter, and that officer’s name and official title in the space
Pub. 538, Accounting Periods and Methods. This provided.
publication provides general information on accounting
methods. 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
Specific Instructions 3115. Also enter the name of the separate and distinct trade or
business requesting an accounting method change on the fourth
Name(s) and Signature(s) line. In the signature section, enter the signature of the individual
who has personal knowledge of the facts and authority to bind
Enter the name of the filer on the first line of page 1 of Form the separate and distinct trade or business of the entity in the
3115. matter, and that person's name and official title in the space
In general, the filer of Form 3115 is the applicant. However, in provided.
circumstances where Form 3115 is filed on behalf of the CFC or 10/50 corporation. For a CFC or 10/50 corporation
applicant, enter the filer's name and identification number on the with a U.S. trade or business, enter the name of the designated
first line of Form 3115 and enter the applicant's name and (controlling domestic) shareholder that retains the jointly
identification number on the fourth line. Receivers, trustees, or executed consent as provided for in Regulations section
assignees must sign any Form 3115 they are required to file. 1.964-1(c)(3)(ii) (or, if the designated shareholder is a member
If Form 3115 is filed for multiple (i) applicants in a of a consolidated group, the common parent corporation) on the
consolidated group of corporations, (ii) applicants with a first line of Form 3115. Enter the name of the CFC or 10/50
common sponsor, (iii) CFCs, (iv) wholly owned partnerships corporation on the fourth line of Form 3115. In addition, a Form
within a consolidated group, and/or (v) separate and distinct 3115 filed on behalf of the CFC or 10/50 corporation by its
trades or businesses (including QSubs or single-member LLCs), controlling domestic shareholder(s) (or the common parent)
attach a schedule listing each applicant and its identification must be signed by an authorized officer of the designated
number (where applicable). This schedule may be combined (controlling domestic) shareholder (or the common parent). If
with the information requested for Part III, line 24a (regarding the there is more than one shareholder, the statement described in
user fee), and Part IV (section 481(a) adjustment). If multiple Regulations section 1.964-1(c)(3)(ii) must be attached to the
names and signatures are required (for example, in the case of application. Also, the controlling domestic shareholder(s) must
CFCs—see instructions below), attach a schedule labeled provide the written notice required by Regulations section
“SIGNATURE ATTACHMENT” to Form 3115, signed under 1.964-1(c)(3)(iii).
penalties of perjury using the same language as in the Estates or trusts. Enter the name of the estate or trust on the
declaration on page 1 of Form 3115. first line of Form 3115. In the signature section, enter the
Individuals. If Form 3115 is filed for a couple who file a joint signature of the fiduciary, personal representative, executor,
income tax return, enter the names of both spouses on the first administrator, etc., who has personal knowledge of the facts and
line and the signatures of both spouses on the signature line. legal authority to bind the estate or trust in the matter, and that
person's official title in the space provided.
Partnerships. Enter the name of the partnership on the first line
of Form 3115. In the signature section, include the signature of Exempt organizations. Enter the name of the organization on
one of the general partners or LLC members who has personal the first line of Form 3115. In the signature section, enter the
knowledge of the facts and who is authorized to sign. Enter that signature of a principal officer or other person who has personal
person's name and official title in the space provided. If the knowledge of the facts and authority to bind the exempt
authorized partner is a member of a consolidated group, then an organization in the matter, and that person's name and official
authorized officer of the common parent corporation with title in the space provided.
personal knowledge of the facts must sign. 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. Form 2848
Generally, for both automatic and non-automatic changes, the Authorization to (1) represent the filer before the IRS, (2) receive
preparer (if not the filer or applicant) must sign the original and a copy of the requested letter ruling, or (3) perform any other
copies of Form 3115. If Form 3115 is e-filed, the preparer need act(s) must be properly reflected on Form 2848. For further
not sign the original e-filed Form 3115 but must still complete the details for an authorized representative and a power of attorney,
preparer information and, if applicable, must sign the duplicate see section 9.03(8) and (9) of Rev. Proc. 2023-1.
automatic Form 3115 copy.
A Form 2848 must be attached to Form 3115 in order for the
Identification Number IRS to discuss a Form 3115 with the filer's representative, even if
Enter the filer's taxpayer identification number on the first line of the filer's representative prepared and/or signed the Form 3115.
Form 3115 as follows.
• Individuals enter their social security number (SSN). For a If the filer intends to have the authorized representative
resident or nonresident alien, enter an individual taxpayer ! receive copies of correspondences regarding its Form
identification number (ITIN). If Form 3115 is for a couple who file CAUTION 3115, it must check the appropriate box on Form 2848.
a joint return, enter the identification numbers of both spouses.
• All others enter the employer identification number (EIN). Fax Number for Option To Receive
• If the filer is the common parent corporation of a consolidated Correspondence by Fax or Electronic Facsimile
group of corporations or a common sponsor of multiple entities,
enter the EIN of the common parent or common sponsor on the Check the box to indicate whether the filer wants to receive, or
first line of Form 3115. If a member of a consolidated group other wants its authorized representative to receive, a copy of
than, or in addition to, the common parent, or if an entity with a correspondence regarding its Form 3115 (for example,
common parent, or if an entity with a common sponsor is additional information letters or the letter ruling) by fax or
requesting an accounting method change, enter the EIN of the electronic facsimile. If the filer answered yes, the filer must
applicant on the fourth line. attach a statement indicating the applicant’s intention to request
• If the common sponsor is filing Form 3115 on behalf of to correspond by fax or electronic facsimile and include the
multiple applicants with that common sponsor, or if the common contact person’s fax number. The listed person(s) must be either
parent is filing Form 3115 on behalf of multiple applicants in a authorized to sign the Form 3115 or an authorized
consolidated group of corporations, multiple CFCs or 10/50 representative of the filer that is included on Form 2848. For
corporations, or multiple and distinct trades or businesses of a further details on the fax procedures, see section 9.04(3) of Rev.
member (including QSubs or single-member LLCs), attach a Proc. 2023-1.
schedule listing each applicant and its identification number (if
applicable). Option To Receive Correspondence by
• If the applicant is a foreign entity that is not otherwise required Encrypted Email Attachment
to have or obtain an EIN, enter “Not applicable” in the space A filer that wants to receive, or wants its authorized
provided for the identifying number. representative to receive, correspondence regarding its Form
3115 (for example, additional information letters or the letter
Principal Business Activity Code ruling) by encrypted email attachment must attach to Form 3115
If the filer is a business, enter the 6-digit principal business a statement requesting the service. The request must specify
activity (PBA) code of the filer. The principal business activity of which email encryption method is to be used and, if the taxpayer
the filer is the activity generating the largest percentage of its has not already provided the appropriate memorandums of
total receipts. See the instructions for the filer's income tax return understanding (MOUs) to use encrypted email attachments,
for the filer's PBA code and definition of total receipts. must include those MOUs. For acceptable email encryption
methods and procedures, see section 9.05(3) of Rev. Proc.
Address 2023-1.
Include the suite, room, or other unit number after the street
address. If the post office does not deliver mail to the street Type of Accounting Method Change
address and the filer has a P.O. box, show the box number Requested
instead of the street address.
Check the appropriate box on Form 3115 to indicate the type of
Year of Change change being requested.
The year of change is the first tax year the applicant uses the • Depreciation or amortization. Check this box for a change
in (1) depreciation or amortization (for example, the depreciation
proposed accounting method, even if no affected items are method or recovery period); (2) the treatment of salvage
taken into account for that year. Each applicant (and filer, if also proceeds or costs of removal; (3) the method of accounting for
an applicant) must list its respective year of change. dispositions of depreciable property; or (4) the treatment of
Example. A calendar year taxpayer that has consistently depreciable property from a single asset account to a multiple
capitalized certain building repair costs from 2015 to 2020 files a asset account (pooling), or vice versa.
Form 3115 to change its method of accounting for building repair • Financial products and/or financial activities of financial
costs to begin deducting these repair costs in 2021. The year of institutions. Check this box for a change in the treatment of a
change is calendar year 2021. Each applicant (and filer, if also financial product (for example, accounting for debt instruments,
an applicant) must list its respective year of change. derivatives, mark-to-market accounting), or in the financial
activities of a financial institution (for example, a lending
Contact Person institution, a regulated investment company, a real estate
The contact person must be an individual authorized to sign investment trust, or a real estate mortgage investment conduit).
Form 3115, or the filer's authorized representative. If this person • Other. For non-automatic change requests, check this box if
is someone other than an individual authorized to sign Form neither of the above boxes applies to the requested change. In
3115, you must attach Form 2848, Power of Attorney and the space provided, enter a short description of the change and
Declaration of Representative. 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

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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

completed contract method for long-term contracts, section 
460).                                                                          Part I—Information for Automatic 
  For automatic change requests, this informational                            Change Request
requirement is satisfied by properly completing Part I, line 1, of 
Form 3115.                                                                     Automatic Changes—Scope and Eligibility 
  As noted on Form 3115, the filer must provide all information                Rules
relevant to the requested accounting method change. All 
relevant information includes all information requested on Form                Line 1a.  Enter the DCN on line 1a. These numbers may be 
3115, these instructions, and any other relevant information,                  found in the List of DCNs at the end of the instructions, the List 
even if not specifically identified on Form 3115 or in these                   of Automatic Changes, or in subsequently published guidance. 
instructions. Table A illustrates, for automatic and non-automatic             In general, enter a number for only one change. However, the 
changes, the Parts of Form 3115 that must be completed. Table                  numbers for two or more changes may be entered on line 1a if 
B illustrates the Schedule(s) to be completed for common                       specifically permitted in applicable published guidance to file a 
method changes.                                                                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 B: Schedules To Complete on Form 3115 for Common Accounting Method Changes
Information to be completed for common method change requests

Common Method                 Schedule A         Schedule B                    Schedule C            Schedule D         Schedule E
Changes
                              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                                                                                  X          X*
Change
LIFO Change—Including                                                          X         X
Pooling
Revenue Recognition                                     X
Change for Deferral 
Method for Advance 
Payments, Cost Offset 
Methods, and/or 
Applicable Financial 
Statement Income 
Inclusion Rule

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) non-automatic change requests. See Table B for a sample of
may file a single Form 3115 for both changes by including both common method changes and the Form 3115 Schedule(s) to be
DCNs 184 and 192 on line 1a of Form 3115. completed for each. Additionally, see published guidance for any
additional required information or statements. For example, an
Line 1b. If the accounting method change is not included in the
applicant that wants to use the mark-to-market method of
List of Automatic Changes or assigned a number in the
accounting under section 475(e) or (f) (DCN 64) must, by the
published guidance providing the automatic accounting method
due dates provided in section 5.03 of Rev. Proc. 99-17, file a
change, check the box for “Other” on line 1b and identify the
statement that satisfies the requirements of section 5.04 of Rev.
revenue procedure or other published guidance under which the
Proc. 99-17.
automatic accounting method change is being requested.
Line 2. If “Yes,” provide an explanation as to why the Part II—Information for All Requests
applicant(s) qualifies to file under the automatic change
procedures. If other published guidance provides for an Line 4. If no, check “No.” If yes, check “Yes” and attach a
automatic accounting method change not listed in the List of statement explaining why the applicant is eligible to change its
Automatic Changes, attach a statement citing the guidance. For accounting method. For example, specific guidance may permit
example, for an applicant electing out of certain exemptions from an applicant to change its method of accounting in its final tax
securities dealer status to the mark-to-market method under year. See section 5.03(2) of Rev. Proc. 2015-13 and sections
section 475, attach a statement citing Rev. Proc. 97-43. If the 6.01 (DCN 7) and 6.07 (DCN 107) of Rev. Proc. 2022-14, or any
eligibility rules otherwise restrict the applicant from requesting successor.
the change under the automatic change procedures, but such Ordinarily, the IRS will not consent to a request for an
rules are waived for the requested change, then check “No.” accounting method change when an applicant ceases to engage
in the trade or business or terminates its existence. Generally,
Certain automatic method change requests require an applicant is considered to cease to engage in a trade or
! concurrent method changes to be made in order to business if the applicant terminates its existence for federal
CAUTION qualify for the automatic change procedures. For
income tax purposes, ceases operation of the trade or business,
example, a taxpayer making a change for accrued bonuses or transfers substantially all the assets of the trade to another
under DCN 133 must make the concurrent UNICAP change if taxpayer. For example, a cessation of a trade or business occurs
the taxpayer is subject to section 263A but is not capitalizing the when a trade or business is incorporated or the assets of the
accrued bonuses under section 263A. trade or business are contributed to a partnership. See sections
Generally, an applicant is only eligible to use the automatic 3.04, 5.01, and 5.03 of Rev. Proc. 2015-13.
change procedures of Rev. Proc. 2015-13 if it satisfies the Line 5. When an acquiring corporation operates the trades or
following requirements (see section 5.01(1) of Rev. Proc. businesses of the parties as separate and distinct trades or
2015-13). businesses after the date of distribution or transfer, the acquiring
1. On the date the applicant files a Form 3115, the change is corporation must use a carryover method. See Regulations
described in the List of Automatic Changes. sections 1.381(c)(4)-1(a)(2) and 1.381(c)(5)-1(a)(2). On the
2. On the date the applicant files a Form 3115, the applicant other hand, when the acquiring corporation does not operate the
meets all requirements for the change provided in the applicable trades or businesses of the parties as separate and distinct
section of the List of Automatic Changes. trades or businesses after the date of distribution or transfer, the
acquiring corporation will generally use the principal method.
3. The requested change is not to the principal method The applicant does not need to secure the Commissioner's
under Regulations sections 1.381(c)(4)-1(d)(1) or consent to use the principal method. See Regulations sections
1.381(c)(5)-1(d)(1). 1.381(c)(4)-1(d)(1) and 1.381(c)(5)-1(d)(1).
4. The requested year of change is not the final year of the Line 6a. Generally, the applicant is under examination with
trade or business (but see the instructions for line 4). respect to a federal income tax return as of the date the
5. For an overall method of accounting change, the applicant (or filer) is contacted in any manner by a representative
applicant has not made or requested an overall method change of the IRS for the purpose of scheduling or conducting any type
during any of the 5 tax years ending with the year of change. of examination of the return. See section 3.18 of Rev. Proc.
6. The applicant has not made or requested a change for 2015-13.
the same item during any of the 5 tax years ending with the year Line 6b. Generally, the applicant's accounting method is an
of change, and issue under consideration if the examining agent has given the
7. In the case of a taxpayer that uses the AFS cost offset applicant (or filer) written notification specifically citing the
method in Regulations section 1.451-3(c) and/or the advance treatment of the item as an issue under consideration. If an
payment cost offset method in Regulations section 1.451-8(e) examining agent does not propose an adjustment for the item
and wants to make a cost-offset related inventory method that is an issue under consideration during the examination, the
change, as defined in section 5.06 of Rev. Proc. 2015-13, as item continues to be an issue under consideration after the
modified by section 4.02 of Rev. Proc. 2021-34, 2021-35 I.R.B. examination ends only if the issue is placed in suspense. The
337 (that is described in the List of Automatic Changes) the applicant's accounting method is an issue placed in suspense if
taxpayer makes a concurrent change under section 16.10(2)(a) the examining agent has given the applicant (or filer) written
(iii)(E) and/or section 16.10(2)(a)(iv)(F) or section 16.10(2)(b)(ii) notification of the IRS's intent to examine the issue during the
(E) of Rev. Proc. 2022-14, as applicable. examination of the subsequent tax year(s) to be examined. See
section 3.08 of Rev. Proc. 2015-13. A partnership or an S
Note. Some automatic changes in methods of accounting waive corporation has an issue under consideration before
some of the above requirements. These changes may be found examination if the same item is an issue under consideration in
in the List of Automatic Changes or the published guidance an examination of a partner’s, member’s, or shareholder's
providing the automatic accounting method change. federal income tax return. For consolidated groups, see section
Line 3. The filer must complete Form 3115, including any 3.08 of Rev. Proc. 2015-13 for issue under consideration rules.
required statements or attachments. See Table A for the Form
3115 Part(s) required to be completed for all automatic and

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For CFCs and 10/50 corporations, the issue under • 120-day window period. The 120-day window is the
! consideration rules are different. See section 3.08(4) of 120-day period following the date an examination of the
CAUTION Rev. Proc. 2015-13. applicant ends, regardless of whether a subsequent examination
has commenced. An applicant qualifies under the 120-day
Lines 6c and 6d. If you answered “Yes” to line 6a, include the window period if Form 3115 is filed in a 120-day window and the
name and telephone number of the examining agent, and the tax accounting method for the same item the applicant is requesting
year(s) under examination in the designated places on line 6c. to change is not an issue under consideration. See section
For any present or former consolidated groups, if there is a tax 8.02(1)(b) of Rev. Proc. 2015-13. If the applicant checks this
year under examination, complete the information on line 6c. box, also include the date the examination ended in the
Provide a copy of Form 3115 to the examining agent no later designated space on line 7b.
than the date the filer timely files Form 3115. See section 6.03(3) • Method not before the director. The present method is not
(a) of Rev. Proc. 2015-13. before the director when it is (A) a change from a clearly
Line 7a. In general, audit protection applies when an permissible method of accounting or (B) a change from an
application for change in accounting method is granted. See impermissible method of accounting and the impermissible
section 8.01 of Rev. Proc. 2015-13. For exceptions where audit method was adopted subsequent to the tax year(s) under
protection is not provided, see section 8.02 of Rev. Proc. examination on the date the applicant files Form 3115. Checking
2015-13. You should answer “Yes” even if you do not receive this box satisfies the statement requirement of section 8.02(1)(c)
audit protection when the change is granted but might receive it (ii) of Rev. Proc. 2015-13.
at the end of the exam under section 8.02(1)(f) of Rev. Proc. • Change resulting in a negative adjustment. Check this
2015-13. For example, a change made under DCN 17 for an box if the change results in a negative adjustment. A negative
applicant that wants to change its treatment of research and adjustment occurs where an item (A) results in a negative
experimental expenditures does not receive audit protection. section 481(a) adjustment for that item for the year of change,
See the List of Automatic Changes for additional method and (B) would have resulted in a negative section 481(a)
changes not subject to audit protection. If you are making a adjustment in each tax year under examination if the change in
change on behalf of one or more applicants that are CFCs or accounting method for that item had been made in the tax
10/50 corporations and audit protection is unavailable for any year(s) under examination. Checking this box satisfies the
such applicants for one or more years due to the application of statement requirement in section 8.02(1)(e)(iii) of Rev. Proc.
section 8.02(5) of Rev. Proc. 2015-13, you should check “No” 2015-13.
and attach an explanation stating the applicants and the years • CAP. This box applies only to consolidated group members
for which there is no audit protection under section 8.02(5). participating in the compliance assurance process (CAP). In
general, audit protection applies to a new member if the new
If no audit protection is given for the requested change, check member is under audit solely by joining a consolidated group
“No” and attach an explanation. For example, if you are making a that participates in the CAP. See section 8.02(1)(d) of Rev. Proc.
change under DCN 17, your explanation is DCN 17. If you are 2015-13. Checking this box satisfies the statement requirement
making a change under DCN 7, your explanation could be that of section 8.02(1)(d)(ii) of Rev. Proc. 2015-13. If the applicant
none of the items on line 7b apply. If multiple items are being checks this box, include the date the member joined the
changed on one Form 3115 and at least one item has audit consolidated group in the designated space on line 7b.
protection and another item does not have audit protection, • Other. The List of Automatic Changes or other guidance
check both “Yes” and “No.” published in the I.R.B. may provide applicants with audit
Line 7b. Generally, the applicant receives audit protection for protection. For example, specific guidance may provide a filer
tax years prior to the year of change if they fall into one of the under exam with audit protection. If this box is checked, attach a
following categories listed below. If Form 3115 is being filed on statement citing the guidance providing audit protection.
behalf of multiple applicants or if multiple items are being • Audit protection at end of exam. If the applicant does not
changed on one Form 3115, check all that apply and attach a fall into one of the categories listed above for line 7b, this box
statement identifying which category applies to which applicant should generally be checked. The applicant may receive audit
or item. Except for “Not under exam” and “Other,” the following protection at the end of the examination, provided the examining
only apply to applicants under examination. agent does not propose an adjustment for the same item and the
accounting method for that same item is not an issue under
• Not under exam. Check this box if (A) the applicant is not
consideration. For certain foreign corporations, the applicant
under exam, and (B) audit protection applies to the item(s) being
must satisfy additional requirements in order to receive audit
changed.
protection at the end of the examination. See section 8.02(1)(f)
• 3-month window. The 3-month window is the period
of Rev. Proc. 2015-13.
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 For CFCs and 10/50 corporations, the rules for audit
month following the close of the applicant's tax year. For ! protection are different. See section 8.02 of Rev. Proc.
52-53-week applicants, the tax year begins on the 1st day of the CAUTION 2015-13 (different rules for the 3-month window,
calendar month nearest to the 1st day of the 52-53-week tax 120-day window, and audit protection at end of exam).
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 Line 8a. If you answered “Yes,” complete lines 8b–d.
tax year begins, the 3-month window is the period beginning on Line 8b. To determine if the applicant’s accounting method is
the 1st day of the 2nd month preceding the month in which the an issue under consideration by Appeals and/or a federal court,
short tax year ends and ending on the last day of the short tax see sections 3.08(2) and 3.08(3) of Rev. Proc. 2015-13.
year. An applicant qualifies under the 3-month window period
when (A) it has been under examination for at least 12 Line 8c. If you answered “Yes” to line 8a, include the name and
consecutive months as of the 1st day of the 3-month window, telephone number of the Appeals officer(s) and/or counsel to the
and (B) the accounting method for the same item the applicant is government, as well as the tax year(s) before Appeals and/or
requesting to change is not an issue under consideration. See federal court in the designated places.
section 8.02(1)(a) of Rev. Proc. 2015-13. Checking this box Line 8d. If you answered “Yes” for line 8a, provide a copy of the
satisfies the statement requirement of section 8.02(1)(a)(iv) of signed Form 3115 to the Appeals officer(s) and/or all counsel to
Rev. Proc. 2015-13. the government, as applicable, no later than the date the filer

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timely files Form 3115. See section 6.03(3)(a) of Rev. Proc.            lines 16a–b is otherwise provided in the applicable Form 3115 
2015-13.                                                                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)
Line 9. If you answered “Yes” to line 6a or 8a, complete line 9. 
                                                                        (ix), 6.12(3)(a)(x), and 6.12(3)(b)(viii) in the List of Automatic 
The information requested on line 9 should be included on a 
                                                                        Changes; 205 (only for changes listed in sections 6.13(3)(h) and 
separate attachment.
                                                                        6.13(3)(j) in the List of Automatic Changes); 206 (only for 
Line 10. If you answered “Yes,” attach an explanation. Unless           changes listed in sections 6.14(3)(a), 6.14(3)(h), and 6.14(3)(j) 
otherwise provided, the applicant does not receive audit                in the List of Automatic Changes; 207 (only for changes listed in 
protection for the requested change if it is an issue under             sections 6.15(3)(a) and 6.15(3)(d) in the List of Automatic 
consideration. See sections 3.08 and 8.02(7) of Rev. Proc.              Changes); 211, 218, 231, 237, 241, 242, 250, 251, 252, 253, 
2015-13.                                                                254, 255, and 256. Line 16c does not need to be completed for 
Lines 11a–c. Unless otherwise provided, an applicant is not             applicants filing automatic method changes. For further details 
eligible to file under the automatic change procedures if the           on what is to be included, see Rev. Proc. 2023-1, sections 
applicant made or requested a prior overall method change or a          7.01(9) (statement of supporting authorities), 9.03(1) (facts and 
prior item change (for the same item) within the 5 tax years            other information), and 9.03(4) (analysis of material facts).
ending with the requested year of change. For additional details,       If the automatic DCN is not specifically listed in the paragraph 
see section 9.03(6)(a) of Rev. Proc. 2023-1 and section 11.02(2)        above, or subsequent guidance released after the issuance of 
of Rev. Proc. 2015-13.                                                  these instructions, skip lines 16a–c.
Line 12. For further details, see section 9.03(6)(b) of Rev. Proc.      Line 17. Insurance companies must also attach a statement 
2022-1.                                                                 indicating whether the proposed accounting method will be used 
                                                                        for annual statement accounting purposes.
Line 13. If you answered “Yes,” complete Schedule A of Form 
3115. For example, an overall accounting method change                  Line 18. For details on requesting and scheduling a 
includes a change from an accrual method to the cash receipts           conference, see sections 9.04(4) and 10 of Rev. Proc. 2023-1.
and disbursements method or vice versa. See section 446(c).             Lines 19a and 19b. For certain automatic method changes, the 
Line 14. Provide the information requested on lines 14a–d if the        applicant must demonstrate that it meets the gross receipts test 
applicant answered “No” to question 13 or if the applicant              under section 448(c) to qualify for the change. This gross 
answered “Yes” to question 13 and is also changing to a special         receipts test is met if a taxpayer has average annual gross 
accounting method for one or more items.                                receipts for the 3 prior tax years at or below the inflation-adjusted 
With the information requested on line 14b, the applicant is            amount. See Useful Items earlier, for guidance on the 
also required to provide a statement of whether or not the              inflation-adjusted amounts.
applicant has claimed any federal tax credit, grant, or subsidy         For the calculation of gross receipts for an overall accounting 
relating to the item(s) being changed (for example, the employee        method change request, whether an applicant qualifies as a 
retention credit for a change in method related to payroll taxes).      small business taxpayer for purposes of applying sections 263A 
A special accounting method for an item is an accounting                and 471, or whether an applicant qualifies as an eligible small 
method (other than the cash method or an accrual method)                business under section 474(c), see section 448(c) and 
expressly permitted by the Code, regulations, or guidance               Regulations section 1.448-2(c), and, as applicable, Regulations 
published in the I.R.B. that deviates from the rules of sections        section 1.263A-1(b)(1)(j) or Regulations section 1.471-1(a)(2).
446, 451, and 461 (and the related regulations) that is applicable      For the calculation of gross receipts for determining whether 
to the applicant's overall accounting method (proposed overall          the applicant has an exempt construction contract under 
method if being changed). For example, the installment                  Regulations section 1.460-3(b), for contracts entered into after 
accounting method under section 453, the mark-to-market                 December 31, 2017, in tax years ending after December 31, 
method under section 475, and the long-term contract method             2017, see section 448(c) and Regulations sections 1.448-2(c) 
under section 460 are special methods of accounting. See                and 1.460-3(b)(3).
section 15.01(2)(d) of Rev. Proc. 2022-14.
Lines 15a and 15b.  Provide the requested information for each          Part III—Information for 
applicant. For guidance on using different methods of                   Non-Automatic Change Request
accounting for each trade or business, see section 446(d).
An applicant may include each member of a consolidated                  Non-automatic change—scope and eligibility rules.            An 
group, each wholly owned partnership within a consolidated              applicant may not use the non-automatic change procedures if 
group, each separate and distinct trade or business of each             any of the following eligibility limitations apply at the time Form 
member of a consolidated group or other entity (even if the             3115 is filed with the IRS National Office.
change is for all of a member's or other entity's trades or             1. The change in accounting method is required to be made 
businesses), and each eligible CFC or 10/50 corporation filing a        according to a published automatic change procedure, such as 
single Form 3115 requesting the identical accounting method             Rev. Proc. 2022-14.
change. Also see Who Must File, earlier.                                2. The requested year of change is the final year of the trade 
Lines 16a–c. For non-automatic changes, the applicant is                or business, unless (a) the change is a result of a transaction to 
required to provide a full explanation of the legal basis to support    which section 381(a) applies; or (b) the applicant demonstrates 
the proposed method, including all authorities supporting the           to the satisfaction of the IRS National Office compelling 
proposed method, and a discussion of all contrary authorities.          circumstances, or that it is in the interest of sound tax 
For further details on what is to be included, see Rev. Proc.           administration for the applicant to change in its final year.
2023-1, sections 7.01(9) (statement of supporting authorities), 
9.03(1) (facts and other information), 9.03(2) (statement of            Line 20. If you answered “Yes,” attach an explanation 
contrary authorities), 9.03(4) (analysis of material facts), and        describing why the applicant is not eligible to file a request under 
9.03(7) (statement identifying pending legislation).                    the automatic change procedures.
For the following automatic method changes, the applicant is 
only required to complete lines 16a–b, unless the information on 

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Line 21.  Attach true copies of all contracts, agreements, and         change and next 3 tax years) for a positive section 481(a) 
other documents directly related to the proposed accounting            adjustment. However, when an applicant is under examination, 
method change. See section 9.03(3) of Rev. Proc. 2023-1.               the section 481(a) adjustment period is 2 tax years (year of 
                                                                       change and next tax year) for a positive section 481(a) 
Line 22.  Include a statement explaining the reason for the            adjustment for a requested accounting method change unless 
proposed change. See sections 7.01(1)(d) and 9.03(1) of Rev.           one of the following categories described on line 7b applies: 
Proc. 2023-1.                                                          3-month window, 120-day window period, method not before the 
Line 23.  If you answered “No” to line 23, a common parent             director, or CAP.
requesting an accounting method change on behalf of a member           For some accounting method changes, there may be special 
of the consolidated group must attach a statement explaining the       rules relating to the section 481(a) adjustment period. See, for 
accounting method used by each member of the consolidated              example, section 16.10(4)(b)(iv)(D) of Rev. Proc. 2022-14 
group for the particular item that is the subject of the method        pertaining to certain section 451 cost offset accounting method 
change request. See section 6.02(5) of Rev. Proc. 2015-13.             changes resulting from concurrent cost-offset related inventory 
Lines 24a and 24b.  For non-automatic change requests, you             method changes.
must pay a user fee for each applicant. Where the filer is not an      Also, for certain accounting method changes, the applicant 
applicant, a fee is not required for the filer. See section 15 and     must make the change on a cut-off basis or modified cut-off 
Appendix A of Rev. Proc. 2023-1 for information regarding user         basis. See, for example, Regulations section 1.446-1(e)(2)(ii)(d)
fees, including reduced user fees and user fees for additional         (5)(iii). In those cases, there is no section 481(a) adjustment. 
applicants filing identical changes in methods of accounting.          Under a cut-off basis, only the items arising on or after the 
Pay the user fees through PAY.gov.                                     beginning of the year of change are accounted for under the new 
                                                                       method of accounting. Any items arising before the year of 
Note. Filers filing under the automatic change procedures do           change continue to be accounted for under the applicant's 
not pay a user fee.                                                    former accounting method.
Example 1.    Filer is the common parent of a consolidated             For a change in accounting method for accruing a foreign 
group of corporations. Filer files a single Form 3115 on behalf of     income tax expense, do not compute a section 481(a) 
itself and two other members of the consolidated group for an          adjustment. Instead, apply the modified cut-off rules in 
identical accounting method change. There are three applicants         Regulations section 1.905-1(d)(5). Attach a statement showing, 
(Filer and the two other members of the consolidated group).           for each separate statutory or residual grouping, the upward and 
Therefore, for a non-automatic change request, all three               downward adjustment (accounted for in the currency in which 
applicants are required to pay a user fee. The filer applicant         the foreign tax liability is denominated) that is required by 
must submit the regular user fee under section (A)(3)(b)(i) of         Regulations section 1.905-1(d)(5)(ii). Provide a separate upward 
Appendix A of Rev. Proc. 2023-1 (or a reduced fee per section          and downward adjustment for foreign income taxes for which the 
(A)(4) of Appendix A of Rev. Proc. 2023-1, if applicable), and the     foreign tax credit is disallowed and to which section 275(a)(4) 
two other applicants qualify for the reduced user fee under            does not apply. See Regulations section 1.905-1(d)(5) and the 
section (A)(5)(b) of Appendix A of Rev. Proc. 2023-1.                  examples in Regulations section 1.905-1(d)(6) for additional 
                                                                       information.
Example 2.    Filer is the common parent of a consolidated             If multiple items are being changed on one Form 3115 and at 
group of corporations. Filer is filing a single Form 3115 on behalf    least one item is changed on a cut-off basis or modified cut-off 
of two other members of the consolidated group for an identical        basis and another item is changed with a section 481(a) 
accounting method change. There are two applicants on Form             adjustment, check both “Yes” and “No” and attach a statement 
3115 (the two members of the consolidated group). Filer is not         identifying which item(s) is being made on a cut-off basis or 
changing its accounting method and, therefore, does not pay a          modified cut-off basis.
fee on account of itself. For a non-automatic change request, 
both applicants are required to pay a user fee. One applicant          An eligible terminated S corporation (as defined in section 
must submit the regular user fee under section (A)(3)(b)(i) of         481(d)(2)) that is required to change an accounting method as a 
Appendix A of Rev. Proc. 2023-1 (or a reduced fee per section          result of a revocation of its S corporation election must take into 
(A)(4) of Appendix A of Rev. Proc. 2023-1, if applicable), and the     account the resulting positive or negative section 481(a) 
other applicant qualifies for the reduced user fee under section       adjustment ratably during the 6-year period beginning with the 
(A)(5)(b) of Appendix A of Rev. Proc. 2023-1. This example             year of change. In addition, an eligible terminated S corporation 
applies similarly to a filer that is the common sponsor of multiple    that is permitted to continue to use the cash method after the 
entities.                                                              revocation of its S corporation election and that changes to an 
                                                                       overall accrual method for the C corporation’s first tax year after 
Example 3.    Filer, a single taxpayer, files Form 3115 on             such revocation may take into account the resulting positive or 
behalf of its three separate and distinct trades or businesses.        negative adjustment required by section 481(a)(2) ratably during 
The request is for an identical accounting method change.              the 6-year period beginning with the year of change. See Rev. 
Notwithstanding that Filer is a single taxpayer, there are three       Proc. 2018-44, 2018-37 I.R.B. 426. Section 481(d)(2) defines an 
applicants on Form 3115. For a non-automatic change request,           eligible terminated S corporation as any C corporation that (1) 
all three applicants are required to pay a user fee. One applicant     was an S corporation on December 21, 2017; (2) revokes its S 
must submit the regular user fee under section (A)(3)(b)(i) of         corporation election after December 21, 2017, but before 
Appendix A of Rev. Proc. 2023-1 (or a reduced fee per section          December 22, 2019; and (3) has the same owners of stock in 
(A)(4) of Appendix A of Rev. Proc. 2023-1, if applicable), and the     identical proportions on December 22, 2017, and the revocation 
other two applicants qualify for the reduced user fee under            date.
section (A)(5)(b) of Appendix A of Rev. Proc. 2023-1.
                                                                       If the accounting method change is an automatic change in 
Part IV—Section 481(a) Adjustment                                      functional currency under section 985 (see section 29.01 of Rev. 
                                                                       Proc. 2022-14), the adjustments required under Regulations 
Line 25.  Ordinarily, an adjustment under section 481(a) is            section 1.985-5 must be made on the last day of the tax year 
required for accounting method changes. The section 481(a)             ending before the year of change. Any gain or loss that must be 
adjustment period is generally 1 tax year (year of change) for a       recognized under Regulations section 1.985-5 is included in 
negative section 481(a) adjustment and 4 tax years (year of            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 Salary bonuses treated as incurred
481. Attach a statement showing the adjustment required under under the present method, but not
Regulations section 1.985-5. The statement should include the incurred under the proposed
amount of the adjustment required pursuant to Regulations method . . . . . . . . . . . . . . . . $40,000
section 1.985-5, a summary of the computation of such Beginning inventory as of January. 1,
adjustment, and an explanation of any other adjustments 2022, with capitalized salary bonuses
required by Regulations section 1.985-5. computed under the present
method . . . . . . . . . . . . . . . . $100,000
Except if instructed differently, you must attach a statement Beginning inventory as of January. 1,
showing the (net) section 481(a) adjustment for each change in 2022, with capitalized salary bonuses,
method for each applicant included on Form 3115. Include a computed under the proposed
summary of how the (net) section 481(a) adjustment was method . . . . . . . . . . . . . . . . $92,000
computed and an explanation of the methodology used to Decrease in beginning inventory as of
determine it. The summary of computation and explanation must January. 1, 2022 . . . . . . . . . . . ($8,000)
be sufficient to demonstrate that the (net) section 481(a) Net section 481(a) adjustment . . . . +$32,000
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, Line 26. In computing the net section 481(a) adjustment, an
state the (net) section 481(a) adjustment in that functional applicant must take into account all relevant accounts. For some
currency. The statement may be combined with the information changes (for example, a change that affects multiple accounts),
requested on the fourth line on page 1 (list the applicants and the section 481(a) adjustment is a net section 481(a)
their identification numbers) and on line 24 (user fee). adjustment. See Example 2 above and the example under
Section 481(a) adjustments (or components of section Schedule A, Part l, line 2h, later. If there is more than one
! 481(a) adjustments) from changes under DCN 248 method change requested, the section 481(a) adjustment is
CAUTION included in the same Form 3115 must be stated in generally separately stated for each method change. However,
accordance with section 6.22(8) of Rev. Proc. 2022-14. some changes may require the netting of section 481(a)
adjustments with those for certain other method changes made
Example 1. Under its present method, XYZ Corporation is during the same year of change. See, for example, certain
deducting certain costs that are required to be capitalized into changes under section 16.10 of Rev. Proc. 2022-14.
inventory under section 263A. XYZ Corporation is proposing to If an election has been made under Regulations section
change its account method to properly capitalize such costs. 1.59A-3(c)(6)(i) to waive an allowed deduction for purposes of
The computation of the section 481(a) adjustment with respect determining the section 59A base erosion and anti-abuse tax,
to the accounting method change is demonstrated as follows. and the method of accounting for the waived deduction is being
changed, the amount of the net section 481(a) adjustment is
Beginning inventory for year of change under determined without regard to the waived deduction. See
proposed method . . . . . . . . . . . . . . . . . $120,000 Regulations section 1.59A-3(c)(6)(iii)(D). As a result, a waived
Beginning inventory for year of change under present deduction has no effect on the calculation of the amount of a
method . . . . . . . . . . . . . . . . . . . . . . . $100,000
section 481(a) adjustment. For an example illustrating how to
Section 481(a) adjustment . . . . . . . . . . . . . . +$20,000 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).
Example 2. WXY Corporation, a calendar year taxpayer, is a
producer and capitalizes costs that are required to be capitalized Line 27. Certain automatic method changes require an
into inventory under section 263A. Each February, WXY applicant with a section 481(a) adjustment remaining on a prior
Corporation pays a salary bonus to each employee who remains change in accounting method to take the remaining portion of
in its employment as of January 31 for the employee's services the prior section 481(a) adjustment into account in the year of
provided in the prior calendar year. Under its present method, change. See, for example, DCNs 234 and 262. If applicable,
WXY Corporation treats these salary bonuses as incurred in the enter the amount of the remaining portion of the section 481(a)
tax year the employee provides the related services. For 2022, adjustment from the prior change.
WXY Corporation proposes to change its accounting method to Line 28. An applicant may elect a 1-year section 481(a)
treat salary bonuses as incurred in the tax year in which all adjustment period for a positive section 481(a) adjustment that is
events have occurred that establish the fact of the liability to pay less than $50,000. See section 7.03(3)(c) of Rev. Proc. 2015-13.
the salary bonuses and the amount of the liability can be An applicant may also elect a 1-year section 481(a) adjustment
determined with reasonable accuracy, pursuant to section period for all positive section 481(a) adjustments for the year of
20.01(2) of Rev. Proc. 2022-14. The computation of WXY change if an eligible acquisition transaction occurs during the
Corporation's net section 481(a) adjustment for the change in year of change or in the subsequent tax year on or before the
accounting method for salary bonuses is demonstrated as due date for filing the applicant's federal tax return for the year of
follows. 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 Accrued income (line 2a) . . . . . . . . . . . . $250,000
Less:
Method of Accounting
Uncollectible amount . . . . . . . . . . . . . . (50,000)
Part I—Change in Overall Method Net income accrued but not received . . . . $200,000
All applicants filing to change their overall accounting method Less:
must complete Schedule A, Part I, including applicants filing
under DCNs 122, 126, 127, 128, 233, 257, 258, and 259 in the Accrued expenses (line 2c) . . . . . . . . . . (75,000)
List of Automatic Changes. Expenses deducted as recurring item
Lines 2a–g. Enter the amounts requested on lines 2a through (line 2g) . . . . . . . . . . . . . . . . . . . . . (5,000)
2g, even though the calculation of some amounts may not have Total expenses accrued but not paid . . . . . (80,000)
been required in determining taxable income due to the
applicant's present accounting method. Applicants with an Section 481(a) adjustment. . . . . . . . . . . . +$120,000
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). Line 3. Check “Yes” if the applicant is requesting to use the
recurring item exception (section 461(h)(3)). The section 481(a)
Note. Do not include amounts that are not attributable to the adjustment must include the amount of the additional deduction
accounting method change, such as amounts that correct a that results from using the recurring item exception.
math or posting error or errors in calculating tax liability. In
addition, for a bank changing to an overall cash/hybrid method of Line 5. Check "Yes" if the applicant is requesting a change to
accounting, do not include any amounts attributable to a special the overall cash method or to a method in which a taxpayer uses
method of accounting. See DCN 127. an accrual method for purchases and sales of inventories and
uses the cash method for computing all other items of income
Line 2b. Enter amounts received or reported as income in a and expense under section 15.17 of Rev. Proc. 2022-14 (DCNs
prior year that were not earned as of the beginning of the year of 233 and 259). See section 15.17(5)(a) of Rev. Proc. 2022-14 to
change. For example, an advance payment received in a prior determine whether an applicant qualifies as a small business
year for goods that were not delivered by the beginning of the taxpayer.
year of change may be reported in the subsequent year if the
applicant qualifies under Regulations section 1.451-8(c) or (d), Part II—Change to the Cash Method for
as applicable. If any amounts entered on line 2b are for advance Non-Automatic Change Request
payments, complete Schedule B.
Limits on cash method use. Except as provided below, C
Line 2h. Enter the net amount, which is the net section 481(a) corporations and partnerships with a C corporation as a partner
adjustment, on line 2h. Also, enter the net section 481(a) may not use the cash method. Tax shelters are also precluded
adjustment on Part IV, line 26. See the instructions for Part IV, from using the cash method. For this purpose, a trust subject to
line 26, earlier. tax on unrelated business income under section 511(b) is
The following example illustrates how an applicant calculates treated as a C corporation with respect to its unrelated trade or
the section 481(a) adjustment when changing to an accrual business activities.
method, a nonaccrual-experience method, and the recurring The limit on the use of the cash method under section 448
item exception. does not apply to the following.
Example. ABC Corporation, a calendar year taxpayer using
the cash method of accounting, has the following items of 1. Farming businesses as defined in section 448(d)(1).
unreported income and expense on December 31, 2021. 2. Qualified personal service corporations as defined in
section 448(d)(2).
Accrued income . . . . . . . . . . . . . . . . . . . . . . $250,000 3. C corporations and partnerships with a C corporation as a
Uncollectible amounts based on partner that meets the section 448(c) gross receipts test for the
the nonaccrual-experience method . . . . . . . . . 50,000 tax year. The gross receipts test is met if a taxpayer has average
Accrued amounts properly deductible annual gross receipts for the 3 prior tax years at or below the
(economic performance has occurred) . . . . . . . 75,000 inflation-adjusted amount. See Useful Items, earlier, for
Expenses eligible for recurring item guidance on the inflation-adjusted amount for the applicable tax
exception . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 year. Also, see section 448(c) and Regulations section
1.448-2(c) to determine if the applicant qualifies for this
exception.
ABC Corporation changes to an overall accrual method, a
nonaccrual-experience method, and the recurring item For farming corporations and partnerships with a C
exception for calendar year 2022. The section 481(a) adjustment corporation as a partner, see section 447 for limits on the use of
is calculated as of January 1, 2022, as follows. 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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determine the AFS income inclusion amount from the sale of
Schedule B—Changes Related to the inventory (AFS cost offset method). See Regulations section
Deferral Method for Advance 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
Payments, Cost Offset Methods, advance payments for the sale of inventory must also use the
advance payment cost offset method described in Regulations
and/or the Applicable Financial section 1.451-8(e). If an applicant chooses to use the AFS cost
Statement Income Inclusion Rule offset method and/or the advance payment cost offset method,
as applicable, it must use such method(s) for all items of gross
Line 1. The deferral method for advance payments. In income in the trade or business that meet the criteria set forth in
general, advance payments must be included in gross income in Regulations sections 1.451-3(c) and 1.451-8(e), as applicable.
the tax year of receipt for federal income tax purposes. However, Under the AFS cost offset method and the advance payment
under Regulations section 1.451-8(c) or (d), an applicant may cost offset method, the cost of goods in progress offset must be
defer the inclusion in income of certain advance payments (or a determined separately for each item of inventory. Under some
portion thereof), as defined in Regulations section 1.451-8(a)(1), circumstances, an applicant without an AFS may use the
to the next tax year. If the applicant is also using the advance advance payment cost offset method in Regulations section
payment cost offset method, the portion of any advance 1.451-8(e). See DCN 253 in section 16.10 of Rev. Proc.
payment to which the cost offset applies is deferred to the tax 2022-14. Applicants changing to or within a cost offset method
year in which ownership of the good is transferred to the may be required to make concurrent accounting method
customer. Under the cost offset method, only the portion of the changes, including cost-offset related inventory changes, as
payment in excess of costs incurred is recognized by the year defined in section 5.06 of Rev. Proc. 2015-13, as modified by
following the year of receipt. section 4.02 of Rev. Proc. 2021-34. See DCN 255 in section
Applicants with or without an applicable financial statement 16.10 of Rev. Proc. 2022-14.
(AFS), as defined in Regulations section 1.451-3(a)(5), may be If the applicant is requesting to change to or within a cost
eligible to use a deferral method for advance payments. See offset method, attach a detailed description of the present and
section 451(c), Regulations section 1.451-8, and section 16.10 proposed methods including the following information.
of Rev. Proc. 2022-14 for more information about the deferral 1. Does the applicant have an AFS as defined in
method for advance payments. Regulations section 1.451-3(a)(5)? If so, identify the type of
Some applicants requesting to change to the deferral method AFS.
must file under the non-automatic change procedures of Rev. 2. Describe any other concurrent proposed cost-offset
Proc. 2015-13. See section 16.10(3) of Rev. Proc. 2022-14. All related inventory method changes and describe the order in
other applicants must generally file under the automatic change which the concurrent changes are being implemented. See
procedures of Rev. Proc. 2015-13. section 16.10 of Rev. Proc. 2022-14.
If the applicant is requesting to change to the deferral method 3. Provide a general description of the items of inventory to
for advance payments described in Regulations section which the change applies.
1.451-8(c) or (d), attach a detailed description of the present and
proposed methods including the following information. 4. Describe how the applicant determines the cost of goods
allocable to each respective item of inventory as required by
1. Explain how the payments meet the definition of an Regulations section 1.451-3(c)(3) or Regulations section
advance payment as defined in Regulations section 1.451-8(a) 1.451-8(e)(4), as applicable.
(1).
2. Does the applicant have an AFS as defined in Line 3. Methods to conform to the AFS income inclusion
Regulations section 1.451-3(a)(5)? If so, identify the type of rule. Generally, for an accrual method taxpayer, the all events
AFS. test under Regulations section 1.451-1(a) for an item of gross
3. For applicants with an AFS. Describe the advance income, or portion thereof, is met no later than when that item, or
payment allocation method if there is more than one portion thereof, is taken into account as AFS revenue (AFS
performance obligation as defined in Regulations section income inclusion rule). The AFS income inclusion rule does not
1.451-3(a)(11). 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
For applicants without an AFS. If the applicant receives an 451(b), Regulations section 1.451-3, and DCN 250 in section
advance payment that is attributable to one or more items 16.10 of Rev. Proc. 2022-14 for additional information about
described in Regulations section 1.451-8(a)(1)(i)(C), describe methods to conform to the AFS income inclusion rule.
the objective criteria on which the applicant's method is based.
For example, the allocation method may be based on payments If the applicant is requesting to change to or within a method
the applicant receives for an item or items it regularly sells or to conform to the AFS income inclusion rule under section
provides separately. 451(b) and Regulations section 1.451-3, attach a detailed
description of the present and proposed methods including the
4. For applicants with an AFS. Under the proposed method, following information:
if the applicant is required to adjust AFS revenue in accordance
with Regulations section 1.451-8(c)(2), describe the specific 1. Identify the type of AFS that is used for purposes of the
adjustments used to arrive at the amount taken into account as AFS income inclusion rule.
AFS revenue. 2. If the taxpayer is required to allocate transaction price to
multiple items of gross income in accordance with Regulations
Applicants filing under the non-automatic change procedures section 1.451-3(d), including any item(s) of gross income that is
of Rev. Proc. 2015-13 should include all information requested in accounted for under a special method of accounting, describe
the instructions for Schedule B, line 1, and see Rev. Proc. the present and proposed allocation method.
2015-13 and Non-automatic change scope and eligibility rules
under Part III, earlier, for additional requirements. 3. Under the proposed method, if the applicant is required to
adjust AFS revenue in accordance with Regulations section
Line 2. Cost offset methods. Regulations section 1.451-3(c) 1.451-3(b)(2), describe the specific adjustments used to arrive at
allows taxpayers to use a cost offset accounting method to the amount taken into account as AFS revenue.

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4. If under the applicant's proposed method of accounting, submethod, Schedule D, Part II, is not applicable. Use
AFS revenue is reduced in accordance with the enforceable Schedule C, Changes Within the LIFO Inventory Method.
right rules in Regulations section 1.451-3(b)(2)(i)(B), describe
Line 3. If an applicant is subject to, but not in compliance with,
why the applicant does not have an enforceable right to the
section 263A, generally on the same Form 3115 the applicant
reduction amount.
must first comply with section 263A before changing an
inventory valuation method. The applicant must complete
Schedule C—Changes Within the Schedule D, Part III, Method of Cost Allocation. For exceptions,
LIFO Inventory Method see Regulations section 1.263A-7(b)(2).
Use this schedule to request a change from one LIFO inventory Line 5a. If the applicant properly elected the LIFO inventory
method or submethod to another LIFO inventory method or method but is unable to furnish a copy of Form(s) 970,
submethod. All applicants changing within the LIFO inventory Application to Use a LIFO Inventory Method, attach the following
method or submethods must complete Part I. Complete Part II statement to Form 3115.
only if applicable. “I certify that to the best of my knowledge and belief [name of
applicant] properly elected the LIFO inventory method by filing
Part I—General LIFO Information Form 970 with its return for the tax year(s) ended [insert date(s)]
Line 6. Applicants changing to the inventory price index and otherwise complied with the provisions of section 472(d)
computation (IPIC) method must use this method for all LIFO and Regulations section 1.472-3.”
inventories. This requirement includes applicants requesting Line 5c. Attach the two statements required by section 23.01(5)
DCN 61 or 62 in the List of DCNs, later. of Rev. Proc. 2022-14.
Schedule D—Change in the Line 6 Applicants requesting to make a cost-offset related
inventory method change, as defined in section 5.06 of Rev.
Treatment of Long-Term Contracts Proc. 2015-13, as modified by section 4.02 of Rev. Proc.
2021-34, may also be required to make concurrent cost offset
Under Section 460, Inventories, or changes under Regulations sections 1.451-3 and/or 1.451-8.
Other Section 263A Assets See the changes under DCN 255 in section 16.10 of Rev. Proc.
2022-14. Applicants making concurrent cost offset changes
Part I—Change in Reporting Income From under Regulations sections 1.451-3 and/or 1.451-8 should also
complete Schedule B, line 2. Concurrent changes may need to
Long-Term Contracts be implemented in a particular order, and special eligibility rules
Line 2a. Under section 460(f), the term “long-term contract” regarding section 481(a) adjustments may apply. See section
means any contract for the manufacture, building, installation, or 16.10 of Rev. Proc. 2022-14 and section 5.01(1)(g) of Rev. Proc.
construction of property that is not completed in the tax year in 2015-13, as modified by section 4.01 of Rev. Proc. 2021-34.
which it is entered into. However, a manufacturing contract will
not qualify as long term unless the contract involves the Part III—Method of Cost Allocation
manufacture of (a) a unique item not normally included in Applicants requesting to change their accounting method for any
finished goods inventory, or (b) any item that normally requires property (produced or acquired for resale) subject to section
more than 12 calendar months to complete. 263A or any long-term contracts as described in section 460
Long-term contracts that do not meet the exceptions under must complete this schedule.
section 460(e) must be accounted for using the percentage of
completion method. See section 460 and the related regulations. If the change is for noninventory property that is subject to
section 263A, attach a detailed description of the types of
Line 2b. To qualify for the exceptions under section 460(e), the property involved.
contract must be:
1. A home construction contract as defined in section 460(e) There are several methods available for allocating and
(5)(A), or capitalizing costs under section 263A, and for allocating costs to
long-term contracts. A change to or from any of these methods is
2. Any other construction contract entered into by the a change in accounting method that requires IRS consent. Using
applicant if, at the time the contract is entered into, it is expected the applicable regulations and notice listed below, the applicant
to be completed within 2 years and the applicant's average should verify which methods are presently being used and the
annual gross receipts for the 3-year period preceding the tax proposed methods that will be used before completing
year the contract was entered into do not exceed the Schedule D, Part III. These methods are as follows.
inflation-adjusted amount. See Useful items, earlier.
Line 2d. Under the simplified cost-to-cost method, only certain 1. Allocating Direct and Indirect Costs
costs are used in determining both (a) costs allocated to the
contract and incurred before the close of the tax year, and • Specific identification method—Regulations sections
(b) estimated contract costs. These costs are (1) direct material 1.263A-1(f)(2) and 1.460-5.
costs; (2) direct labor costs; and (3) allowable deductions for • Burden rate method—Regulations sections 1.263A-1(f)(3)(i)
depreciation, amortization, and cost recovery allowances on and 1.460-5.
equipment and facilities directly used to construct or produce the • Standard cost method—Regulations sections 1.263A-1(f)(3)
subject matter of the long-term contract. See Regulations (ii) and 1.460-5.
section 1.460-5(c). • Any other reasonable allocation method—Regulations
sections 1.263A-1(f)(4) and 1.460-5.
Part II—Change in Valuing Inventories Including
Cost Allocation Changes 2. Allocating Mixed Service Costs
If the applicant is currently using a LIFO inventory method or
submethod and is changing to another LIFO inventory method or • 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) 3. To make or revoke an election under section 13261(g)(2)
(iii)(B). or (3) of the Revenue Reconciliation Act of 1993 (relating to
• Simplified service cost method: section 197 intangibles);
—Using the labor-based allocation ratio—Regulations 4. To change the placed-in-service date;
section 1.263A-1(h)(4). 5. To change the salvage value (except for a change in
—Using the production cost allocation ratio—Regulations salvage value to zero when the salvage value is expressly
section 1.263A-1(h)(5). treated as zero by the Code, the regulations, or other published
• Any other reasonable allocation method—Regulations section guidance); or
1.263A-1(f)(4).
6. To change a useful life under section 167 (except for a
change to or from a useful life, recovery period, or amortization
3. Capitalizing Additional Section 263A Costs period that is specifically assigned by the Code, the regulations,
or other published guidance).
• Simplified production method:
—Without historic absorption ratio election—Regulations List of DCNs
section 1.263A-2(b)(3).
—With historic absorption ratio election—Regulations Summary of Automatic Accounting Method
section 1.263A-2(b)(4).
Changes
• Modified simplified production method:
This list includes regulatory automatic changes, changes
—Without historic absorption ratio election—Regulations provided for in Rev. Proc. 2022-14, and automatic changes
section 1.263A-2(c)(3). provided for in other guidance. These automatic changes may
—With historic absorption ratio election—Regulations be modified or supplemented with additional automatic changes
section 1.263A-2(c)(4). by subsequently published guidance.
• Simplified resale method:
—Without historic absorption ratio election—Regulations This list provides a brief description of the automatic changes
section 1.263A-3(d)(3). in method of accounting made using Form 3115. A filer/applicant
—With historic absorption ratio election—Regulations may not rely on the list or the descriptions of accounting method
section 1.263A-3(d)(4). changes in the list as authority for making an accounting method
• U.S. ratio method—Notice 88-104, 1988-2 C.B. 443. change. A filer/applicant that is within the scope of, and complies
• Any other reasonable allocation method—Regulations section with, all the applicable provisions of the published guidance that
1.263A-1(f)(4) (including the methods listed above under authorizes each listed change may rely on the applicable
Allocating Direct and Indirect Costs). published guidance as authority for its automatic accounting
method change. If any information in the list conflicts with
Schedule E—Change in Depreciation published guidance, the published guidance applies. Each
automatic method change described in Rev. Proc. 2022-14, as
or Amortization modified, contains a contact person you may call if you need
All applicants requesting to change their accounting method for additional information concerning the change (not a toll-free
depreciation or amortization must complete Schedule E of Form number).
3115. Attach a statement describing the property subject to the
change. Include the property description, type, placed-in-service Each item in the list below:
year, and use in the applicant's trade or business or • Designates an automatic accounting method change number
income-producing activity, and include the type and amount of for each change for entry on line 1a of Form 3115;
any tax credit claimed, subsidy, or grant received, along with any • Briefly describes the accounting method change and its
necessary adjustments to basis required under the Code, with primary Code section(s);
respect to the property. The statement should include a • Indicates in some cases which schedules of Form 3115 to
description of the incentive received with respect to the property complete; and
subject to the change, including whether the type of incentive is • Provides a reference to the basic published guidance (for
a tax credit, subsidy, grant, or other incentive and whether the example, revenue procedure) that provides for the automatic
incentive is funded by the federal government, a state or local change, which filers should review prior to completing Part I,
government, or an agency or instrumentality thereof. Applicants Information for Automatic Change Request, on page 1 of Form
changing their accounting method for depreciation or 3115.
amortization under the automatic change procedures should see Note. Certain retired or obsolete numbers in the List of DCNs
the depreciation changes in the List of DCNs below. have not been replaced in order to maintain continuity for the
Do not file Form 3115: active DCNs.
1. To make an election under section 167, 168, 179, 197, or In the event the underlying authority for any of the DCNs
former section 1400I; ! becomes obsolete or is superseded, then a change can
2. To revoke an election made under one of those sections; 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 treating the loan amount as a loan. to
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)— treating the costs as deductible, except to the extent they result in the creation or to
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 a specific charge-off method that complies with section 166. See section 4.01 of Rev. Proc. 2022-14.to
6 Bad debt conformity for banks (section 166)—for banks other than new banks, the method that conforms to Regulations to
section 1.166-2(d)(3) for the first time the bank makes this change, or involuntarily revoke this method. This change does not to
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 a permissible method for changes allowed under to
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 another permissible to
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 a permissible method as described in section 6.03 of Rev. Proc. 2022-14. See section 6.03 of Rev. Proc. to
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 not amortizing the premium (revoking the to
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 another permissible method, to
from the expense method another permissible method, to from the deferred expense method another permissible method, to
from the current period of amortization a different period of amortization under the deferred expense method, or to 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, deductible expenses or capital expenditures and amortization (for developed software), capital expenditures to to
and depreciation or amortization (for acquired computer software), or deductible expenses under Regulations section to
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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List of DCNs
No. Change
19 Package design costs (section 263) to— the capitalization method, the design-by-design capitalization and 60-month to
amortization method, or the pool-of-cost capitalization and 48-month amortization method. See section 11.01 of Rev. Proc. to
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, a method to
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, a qualifying method or methods. Complete Schedule D, Parts II and III, of Form 3115. See section 12.01 of Rev. to
Proc. 2022-14.
23 Certain uniform capitalization methods used by producers and reseller-producers (section 263A)—for qualifying
applicants, a qualifying method or methods. Complete Schedule D, Parts II and III, of Form 3115. See section 12.02 of Rev. to
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, treating the costs as capital expenditures allocable to the building. Complete Schedule E of Form 3115 if the to
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, treating certain deductions attributable to such transactions in accordance with section 267, to
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, treating as deductible or capitalizable in the year in which includible in the to
employee’s income, and for vacation pay that is deferred compensation, from treating as deductible or capitalizable when
accrued treating as deductible or capitalizable in the year in which paid to the employee. See section 14.01 of Rev. Proc. to
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 treating such contributions as not being on account of the tax year if they are attributable to compensation earned to
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, capitalizing and amortizing the costs. See section 15.02 of Rev. Proc. 2022-14.to
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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List of DCNs
No. Change
35 Nonaccrual-experience method (section 448)—for an applicant changing: a safe harbor method provided in Regulations to
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 another sub-method regarding tracing of recoveries permitted under Regulations section to
1.448-3(f)(2)(iii); or the NAE book safe harbor method described in section 5.01 of Rev. Proc. 2011-46, 2011-42 I.R.B. 518. to
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, the method whereby interest is accrued until either the loan is worthless under section 166 to
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, inclusion in gross to
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, accrue these items in the tax year the applicant receives payments or notice of approval of its refund to
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, the method that excludes these payments from the applicant’s gross income and from the to
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, treatment as a liability incurred in the tax year to
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, treatment as a liability as incurred in the tax year in which the services are provided. See to
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, treating these taxes as incurred in the tax year in which the taxes are paid, or to to
account for these taxes under the recurring item exception to the economic performance rules, or revoke the ratable accrual to
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, treating the liability as incurred in the tax year in which (a) all the events have occurred to
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, the method stated above where the applicant already uses that method of accounting for to
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 capitalizing and amortizing distributor to
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 a method of reducing the cost of the goods by the cash discounts and to
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 the retail safe harbor method in section 4 of Rev. Proc. 98-29, 1998-1 C.B. 857, or a method other than to to
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 a permissible method of identifying or valuing inventories. to
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, the safe harbor method of accounting (the Core to
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, the permitted method as described in section to
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 (a) the actual cost of the goods most recently purchased or produced (most-recent acquisitions to
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, the Alternative LIFO Method described in Rev. Proc. 97-36, 1997-2 C.B. 450, as modified by Rev. Proc. 2008-23, to
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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                                                 List of DCNs
No. Change
59  Used Vehicle Alternative LIFO Method (section 472)—for a qualifying applicant that sells used automobiles and used 
    light-duty trucks,   the Used Vehicle Alternative LIFO Method, as described in Rev. Proc. 2001-23, 2001-1 C.B. 784, as to
    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,   a to
    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   the IPIC method in accordance with all relevant provisions of Regulations section 1.472-8(e)to
    (3); or from the IPIC method as described in T.D. 7814, 1982-1 C.B. 84 (the old IPIC method)   the IPIC method as described to
    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)   using 100% of the IPI to determine the base-year cost and dollar-value of a LIFO to
    pool(s); from using a weighted arithmetic mean   using a weighted harmonic mean to compute an IPI for a dollar-value to
    pool(s); and from using a components-of-cost method to define inventory items   using a total-product-cost method to define to
    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   the link-chain IPIC method, or vice versa; (b)   or to to from the 10% method; (c)   a pooling to
    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   Table 9 (Producer price indexes and percent changes for commodity to
    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,   the mark-to-market method under section 475(e) or (f). An election statement must be filed to
    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,   the to
    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   the section 166 specific to
    charge-off method. See section 25.01 of Rev. Proc. 2022-14.
67  Insurance company premium acquisition expenses (section 832)—for certain insurance companies,   a safe harbor to
    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,   the composite method or   alternative methods set forth in Notice 88-100, 1988-2 C.B. 439, and to to
    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)— the use of another functional currency for the applicant or its qualified business unit to
(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 the to
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 including market discount in income for the tax year of disposition or partial principal payment to
(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 using the cash method to report such interest. See to
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, a method that is consistent with Rev. Rul. 91-46. However, the change is to
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, capitalizing such costs in inventory costs under section to
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, a method of accounting provided in Regulations sections 1.263(a)-4, 1.263(a)-5, and 1.167(a)-3(b). to
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, a safe harbor method provided under Regulations section 1.446-6(e)(1) or (e)to
(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, treat such costs as ordinary and necessary business expenses deductible under section 162. See to
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   the method of accounting provided in Regulations section 1.168(i)-1(h)(2) to comply with the 2020 change in law to 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,   a method of accounting in accordance with Regulations section 1.280F-6(f)(2)(iv). Complete Schedule E to
    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,   the method of including those payments in discounted unpaid losses without regard to section 404. See section to
    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   using a permissible method of accounting for to
    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   the safe harbor method of to
    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   the safe harbor to
    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,   treating rotable spare parts as inventoriable to
    items. See section 22.08 of Rev. Proc. 2022-14.

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List of DCNs
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 the Advance to
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 the safe harbor method provided in Rev. Proc. 2008-25, 2008-1 C.B. 686, which provides that, solely for the purposes to
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 an overall accrual method. Complete Schedule A, Part I, of Form 3115. Also to
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 an overall accrual method and the to
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 the service warranty income method described in to
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 the overall cash method. See section 15.10 of Rev. Proc. 2022-14.to
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, an overall cash/hybrid method described in section 15.12(2)(b) of Rev. Proc. 2022-14. to
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), including the payments or the fair market value of property in to
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) excluding from income the payments or the fair market value to
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 a method consistent with the holding in Rev. Rul. 69-314, 1969-1 C.B. 139. This change does not apply to 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 reporting this income in the tax year in which the bond is redeemed, to
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 the method described in section 455 and the related regulations, including an eligible applicant that to
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 the to
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 the rent allocation method provided in Regulations section 1.467-1(d)(2)(iii). See section 21.01 of Rev. Proc. to
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 another permissible method of identifying and valuing inventories. to
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 using an official used vehicle guide for valuing used to
vehicles; or from using an official used vehicle guide for valuing used vehicles using a different official used vehicle guide for to
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) deducting the advertising costs under section 162 as the to
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, use a different “official used vehicle guide” in conjunction with to
the Used Vehicle Alternative LIFO Method, or a different precise manner of using an official used vehicle guide (for example, to
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 properly to
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 properly treating the applicant as having a depreciable interest in such property for federal to
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 comply with Regulations section to
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 the method described in section 461(c) and section 1.461-1(c)(1) (ratable accrual election) for a tax to
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 treat its to
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 be treated as a reseller without production activities as described in section 5.02 of Rev. Proc. 2010-44, 2010-49 to
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 recognize advance payments in gross income consistent with a changed manner for to
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 use the new AFS method for purposes of Regulations to
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 recognizing its California to
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 treat the transaction as the payment of a cash refund and sale of a gift card in the amount of the gift to
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 the method described in Rev. Proc. 2011-22 to determine the recovery periods for depreciation of certain to
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 (a) the wireline network assets maintenance allowance method to
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 (a) the wireless network asset maintenance to
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 the method described in Rev. Proc. 2011-43, to determine to
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 a method of accounting to conform to any of the holdings in Rev. Rul. 2012-1, 2012-2 I.R.B. to
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 not applying section 263A to the production of a plant or plants that have been removed from the list of plants with to
a nationwide weighted average preproductive period in excess of 2 years, or is revoking its section 263A(d)(3) election not to
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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No. Change
184 Deducting repair and maintenance costs or capitalizing improvement costs (sections 162 and 263(a))—for an
applicant changing deducting amounts paid or incurred for repair and maintenance costs under section 162 and Regulations to
section 1.162-4 or changing capitalizing amounts paid or incurred for improvements to tangible property and, if depreciable, to
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 the method of deducting such amounts in the tax year in to
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 the method of deducting such amounts in the tax year in which to
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 the method of to
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 the optional method of accounting for rotable and temporary to
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 the to
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 deducting amounts paid or incurred in the process of investigating or to
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 a reasonable allocation method under Regulations section 1.263A-1(f)(4) for self-constructed assets or to
from not capitalizing a cost subject to section 263A capitalizing that cost under a reasonable allocation method under to
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,   an otherwise to
    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)   properly depreciating or amortizing to
    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   another permissible method listed in section 6.12(3) of Rev. Proc. 2022-14. Certain changes are made on a modified to
    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   (a) not adjusting the to
    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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                                                   List of DCNs
No. Change
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   (a) the safe harbor method provided in Rev. Proc. 2002-65, 2002-2 C.B. 700; or (b) the safe harbor method to
    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   a method consistent with the holding in Rev. Rul. 69-314, 1969-1 C.B. 139. This change only applies to retainages under to
    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   a to
    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   a non-life insurance company to
    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   the safe harbor method provided by Rev. Proc. to
    2015-39, 2015-33 I.R.B. 197. See section 20.12 of Rev. Proc. 2022-14. 
221 Obsolete.

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List of DCNs
No. Change
222 Remodel-refresh safe harbor method (section 263)—for a qualified taxpayer changing the remodel-refresh safe harbor to
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 change the to
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, capitalizing interest with respect to the production of designated property in accordance with to
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 not including temporary markups and markdowns in determining the retail selling prices of to
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 the safe to
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 change the characterization of an item as an organizational expenditure, the determination of the tax year in to
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 a permissible method of identifying and to
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 a method under the new financial accounting standards jointly to
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), not applying to
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 the overall cash method. Complete certain lines of Schedule A, to
Part I, of Form 3115. See section 15.17 of Rev. Proc. 2022-14.

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                                                      List of DCNs
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   no to
    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   stop capitalizing costs under 263A. Complete Schedule D, to
    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   the simplified resale method, the simplified to
    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   (a) a method of accounting to
    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   a method of to
    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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                                                   List of DCNs
No. Change
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   treat commissions as to
    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)   (a) change to comply with Regulations to
    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   (a) apply to 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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                                                        List of DCNs
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   (a) the deferral method provided in Regulations section 1.451-8(c), (b) the specified goods to
    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   (a) the deferral method provided in Regulations section 1.451-8(d)(3), to 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   (a) apply to       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   comply with Regulations section to
    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   comply with Regulations section 1.451-8(e)(8)(ii) as a result of a concurrent cost-offset related to
    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   treat such costs as incurred in accordance with Regulations sections 1.461-1(a)(2) and 1.461-4(d)(4) if to
    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   an overall accrual method in to
    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   an to
    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   the section 471(c) NIMS to
    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   an inventory method under to
    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)—  charging specified research or experimental expenditures to 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
States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to
figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential,
as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for business
taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the estimates shown in the instructions
for their business income tax return. The estimated burden for individual taxpayers filing this form is approved under OMB control
number 1545-0074 and is included in the estimates shown in the instructions for their individual income tax return. The estimated
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
Preparing . . . . . . . . . . . . . . . . . . 21 hours, 3 minutes
Sending . . . . . . . . . . . . . . . . . . . 32 minutes

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be
happy to hear from you. You can send us comments from IRS.gov/FormComments. Or you can send your comments to: Internal
Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send
Form 3115 to this address. Instead, see When and Where To File, earlier.

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