Fillable Form 3115 - Application For Change In Accounting Method (Page 4 of 8) in pdf

Form 3115 (Rev. 12-2015)

Page

Part IV

Section 481(a) Adjustment

Yes No

Does published guidance require the applicant (or permit the applicant and the applicant is electing) to implement the

requested change in method of accounting on a cut-off basis? .

If “Yes,” attach an explanation and do not complete lines 26, 27, and 28 below.

Enter the section 481(a) adjustment. Indicate whether the adjustment is an increase (+) or a decrease (-) in

income.

Attach a summary of the computation and an explanation of the methodology

▶

used to determine the section 481(a) adjustment. If it is based on more than one component, show the

computation for each component. If more than one applicant is applying for the method change on the

application, attach a list of the (a) name, (b) identification number, and (c) the amount of the section 481(a)

adjustment attributable to each applicant.

Is the applicant making an election to take the entire amount of the adjustment into account in the tax year of change?

If “Yes,” check the box for the applicable elective provision used to make the election (see instructions).

$50,000 de minimis election

Eligible acquisition transaction election

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?

If “Yes,” attach an explanation.

Schedule A—Change in Overall Method of Accounting (If Schedule A applies, Part I below must be completed.)

Part I

Change in Overall Method (see instructions)

Check the appropriate boxes below to indicate the applicant’s present and proposed methods of accounting.

Present method:

Cash

Accrual

Hybrid (attach description)

Proposed method:

Cash

Accrual

Hybrid (attach description)

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 2a through 2g.

Amount

a Income accrued but not received (such as accounts receivable) .

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. .

c Expenses accrued but not paid (such as accounts payable). .

d Prepaid expenses previously deducted .

e Supplies on hand previously deducted and/or not previously reported .

Inventory on hand previously deducted and/or not previously reported. Complete Schedule D, Part II.

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.

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h Net section 481(a) adjustment (Combine lines 2a–2g.) 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 26. .

Yes

Is the applicant also requesting the recurring item exception under section 461(h)(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 (such as, tax-exempt organization returns) for that period. If the amounts in Part I,

lines 2a through 2g, do not agree with the amounts shown on both the profit and loss statement and the balance sheet, attach

a statement explaining the differences.

Is the applicant making a change to the overall cash method under Rev. Proc. 2002-28 (DCN “33”)? .

Yes

If “Yes,” attach a statement that provides the applicant’s NAICS code. See instructions.

Part II

Change to the Cash Method for Non-Automatic Change Request (see instructions)

Applicants requesting a change to the cash method must attach the following information:

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.

An explanation as to whether the applicant is required to use the accrual method under any section of the Code or regulations.

3115

Form

(Rev. 12-2015)

Form 3115 - Application For Change In Accounting Method Page 4

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