IRS updates list of automatic accounting method changes

In Rev. Proc. 2023-24, the IRS on Thursday provided a comprehensive, updated list of changes in tax accounting methods to which the automatic change procedures in Rev. Proc. 2015-13, as subsequently modified, apply.

Rev. Proc. 2015-13 itself updated and revised prior general procedures under Sec. 446(e) to obtain the IRS’s consent to obtain automatic and advance nonautomatic consent to change a method of accounting. It has since been modified by Rev. Procs. 2015-33, 2016-1, 2017-59, 2021-26, 2021-34, and 2022-14.

The method changes in Rev. Proc. 2023-24 are arranged in 32 sections by Code section, covering a broad array of tax accounting methods. It makes almost 30 significant changes to the list of automatic changes in Rev. Proc. 2022-14, many related to depreciation and amortization or uniform capitalization  methods.

In each case, the method change is described, including its applicability. The description may also include conditions of inapplicability and additional requirements. Each method change is given a designated automatic accounting method change number for use in completing Form 3115, Application for Change in Accounting Method.

Rev. Proc. 2023-24 lists 29 significant modifications and clarifications it makes to the list of automatic changes in Rev. Proc. 2019-43. For example, Section 6.01 relating to changing from an impermissible to permissible method of accounting for depreciation or amortization is modified to provide that Section 6.01 does not apply to any property for which the taxpayer has claimed a federal income tax credit, unless the change does not alter the amount of the federal income tax credit.

Rev. Proc. 2023-24 is generally effective for Forms 3115 filed on or after June 15, 2023, for a year of change ending on or after Oct. 31, 2022, that is filed under the automatic change procedures of Rev. Proc. 2015-13, as clarified and modified.

To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.