Form 3115 - Application For Change In Accounting Method Page 4
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84
Form 3115 (Rev. 12-2009)
Page
Section 481(a) Adjustment (continued)
Part IV
Yes No
26
If the section 481(a) adjustment is an increase to income of less than $25,000, does the applicant elect to take the
entire amount of the adjustment into account in the year of change?
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27
Is any part of the section 481(a) adjustment attributable to transactions between members of an affiliated group, a
consolidated group, a controlled group, or other related parties?
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If “Yes,” attach an explanation.
Schedule A—Change in Overall Method of Accounting (If Schedule A applies, Part I below must be completed.)
Change in Overall Method (see instructions)
Part I
1
Enter the following amounts as of the close of the tax year preceding the year of change. If none, state “None.” Also, attach a
statement providing a breakdown of the amounts entered on lines 1a through 1g.
Amount
$
a Income accrued but not received (such as accounts receivable) .
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b Income received or reported before it was earned (such as advanced payments). Attach a description of
the income and the legal basis for the proposed method .
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c Expenses accrued but not paid (such as accounts payable)
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d Prepaid expenses previously deducted .
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e Supplies on hand previously deducted and/or not previously reported .
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f
Inventory on hand previously deducted and/or not previously reported. Complete Schedule D, Part II
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g Other amounts (specify). Attach a description of the item and the legal basis for its inclusion in the
calculation of the section 481(a) adjustment.
h Net section 481(a) adjustment (Combine lines 1a–1g.) Indicate whether the adjustment is an increase (+)
or decrease (-) in income. Also enter the net amount of this section 481(a) adjustment amount on Part IV,
$
line 25. .
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2
Is the applicant also requesting the recurring item exception under section 461(h)(3)? .
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Yes
No
3
Attach copies of the profit and loss statement (Schedule F (Form 1040) for farmers) and the balance sheet, if applicable, as of
the close of the tax year preceding the year of change. Also attach a statement specifying the accounting method used when
preparing the balance sheet. If books of account are not kept, attach a copy of the business schedules submitted with the
Federal income tax return or other return (e.g., tax-exempt organization returns) for that period. If the amounts in Part I, lines
1a through 1g, do not agree with those shown on both the profit and loss statement and the balance sheet, attach a statement
explaining the differences.
Change to the Cash Method For Advance Consent Request (see instructions)
Part II
Applicants requesting a change to the cash method must attach the following information:
1
A description of inventory items (items whose production, purchase, or sale is an income-producing factor) and materials and
supplies used in carrying out the business.
2
An explanation as to whether the applicant is required to use the accrual method under any section of the Code or regulations.
Schedule B—Change to the Deferral Method for Advance Payments (see instructions)
1
If the applicant is requesting to change to the Deferral Method for advance payments described in section 5.02 of Rev. Proc.
2004-34, 2004-1 C.B. 991, attach the following information:
a A statement explaining how the advance payments meet the definition in section 4.01 of Rev. Proc. 2004-34.
b If the applicant is filing under the automatic change procedures of Rev. Proc. 2008-52, the information required by section
8.02(3)(a)-(c) of Rev. Proc. 2004-34.
c If the applicant is filing under the advance consent provisions of Rev. Proc. 97-27, the information required by section
8.03(2)(a)-(f) of Rev. Proc. 2004-34.
2
If the applicant is requesting to change to the deferral method for advance payments described in Regulations section
1.451-5(b)(1)(ii), attach the following.
a A statement explaining how the advance payments meet the definition in Regulations section 1.451-5(a)(1).
b A statement explaining what portions of the advance payments, if any, are attributable to services, whether such services are
integral to the provisions of goods or items, and whether any portions of the advance payments that are attributable to
non-integral services are less than five percent of the total contract prices. See Regulations sections 1.451-5(a)(2)(i) and (3).
c A statement explaining that the advance payments will be included in income no later than when included in gross receipts for
purposes of the applicant's financial reports. See Regulations section 1.451-5(b)(1)(ii).
d A statement explaining whether the inventoriable goods exception of Regulations section 1.451-5(c) applies and if so, when
substantial advance payments will be received under the contracts, and how the exception will limit the deferral of income.
3115
Form
(Rev. 12-2009)
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