Instructions For Form 3115 (Rev. December 2015) Page 11
ADVERTISEMENT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23Part II—Change in Valuing Inventories Including
1. Allocating Direct and Indirect Costs
Cost Allocation Changes
Specific identification method—Regulations sections
1.263A-1(f)(2) and 1.460-5.
If the applicant is currently using a LIFO inventory method or
Burden rate method—Regulations sections 1.263A-1(f)(3)(i)
submethod and is changing to another LIFO inventory method or
submethod, Schedule D, Part II is not applicable. Use
and 1.460-5.
Schedule C, Changes Within the LIFO Inventory Method.
Standard cost method—Regulations sections 1.263A-1(f)(3)
(ii) and 1.460-5.
Line 3. If an applicant is subject to, but not in compliance with,
Any other reasonable allocation method—Regulations
section 263A, generally on the same Form 3115 the applicant
sections 1.263A-1(f)(4) and 1.460-5.
must first comply with section 263A before changing an
inventory valuation method. The applicant must complete
2. Allocating Mixed Service Costs
Schedule D, Part III, Method of Cost Allocation. For exceptions,
see Regulations section 1.263A-7(b)(2).
Direct reallocation method—Regulations section 1.263A-1(g)
(4)(iii)(A).
Line 5a. If the applicant properly elected the LIFO inventory
Step-allocation method—Regulations section 1.263A-1(g)(4)
method but is unable to furnish a copy of Form(s) 970,
(iii)(B).
Application to Use a LIFO Inventory Method, attach the following
statement to Form 3115:
Simplified service cost method:
“I certify that to the best of my knowledge and belief (name of
Using the labor-based allocation ratio—Regulations section
applicant) properly elected the LIFO inventory method by filing
1.263A-1(h)(4).
Form 970 with its return for the tax year(s) ended (insert date(s))
Using the production cost allocation ratio—Regulations
and otherwise complied with the provisions of section 472(d)
section 1.263A-1(h)(5).
and Regulations section 1.472-3.”
Any other reasonable allocation method—Regulations section
1.263A-1(f)(4).
Line 5c. Attach the two statements required by section 22.01(5)
of Rev. Proc. 2015-14.
3. Capitalizing Additional Section 263A Costs
Part III—Method of Cost Allocation
Simplified production method:
Applicants requesting to change their method of accounting for
Without historic absorption ratio election—Regulations
any property (produced or acquired for resale) subject to section
section 1.263A-2(b)(3).
263A or any long-term contracts as described in section 460
With historic absorption ratio election—Regulations section
must complete this schedule.
1.263A-2(b)(4).
If the change is for noninventory property that is subject to
Simplified resale method:
section 263A, attach a detailed description of the types of
Without historic absorption ratio election—Regulations
property involved.
section 1.263A-3(d)(3).
There are several methods available for allocating and
With historic absorption ratio election—Regulations section
capitalizing costs under section 263A, and for allocating costs to
1.263A-3(d)(4).
long-term contracts. A change to or from any of these methods is
U.S. ratio method—Notice 88-104, 1988-2 C.B. 443.
a change in accounting method that requires IRS consent. Using
Any other reasonable allocation method—Regulations section
the applicable regulations and notice listed below, the applicant
1.263A-1(f)(4) (including the methods listed above under
should verify which methods are presently being used and the
Allocating Direct and Indirect Costs).
proposed methods that will be used before completing
Schedule D, Part III. These methods are as follows:
Schedule E—Change in Depreciation
3. To make or revoke an election under section 13261(g)(2)
or (3) of the Revenue Reconciliation Act of 1993 (relating to
or Amortization
section 197 intangibles);
4. To change the placed-in-service date;
All applicants requesting to change their method of accounting
for depreciation or amortization must complete Schedule E of
5. To change the salvage value (except for a change in
Form 3115. Applicants changing their method of accounting for
salvage value to zero when the salvage value is expressly
depreciation or amortization under the automatic change
treated as zero by the Code, the regulations, or other published
procedures should see the depreciation changes in the List of
guidance); or
DCNs below.
6. To change a useful life under section 167 (except for a
Do not file Form 3115:
change to or from a useful life, recovery period, or amortization
period that is specifically assigned by the Code, the regulations,
1. To make an election under section 167, 168, 179, 197, or
or other published guidance).
1400I;
2. To revoke an election made under one of those sections;
-11-
ADVERTISEMENT
0 votes
Related Articles
Related forms
Related Categories
Parent category: Financial