Instructions For Form 3115 (Rev. December 2015) (Page 16 of 23) in pdf

List of DCNs

No.

Change

Changes within IPIC inventory method (section 472)—for one or more of the following changes within IPIC: (a) from the

double-extension IPIC method to the link-chain IPIC method, or vice versa; (b) to or from the 10% method; (c) to a pooling

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 to Table 9 (Producer price indexes and percent changes for commodity

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 22.02 of Rev. Proc. 2015-14; 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 22.07 of Rev. Proc. 2015-14. Note. This change is

implemented on a cut-off basis.

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 21.07 of Rev. Proc. 2015-14. Note. This change is implemented on a cut-off

basis.

Mark-to-market (section 475)—for accounting for securities or commodities by commodities dealers, securities traders, and

commodities traders, to the mark-to-market method under section 475(e) or (f). An election statement must be filed 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 23.01 of

Rev. Proc. 2015-14.

Dealer status changes (section 475)—for an applicant electing out of certain exemptions from securities dealer status, to the

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.

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 to the section 166 specific

charge-off method. See section 24.01 of Rev. Proc. 2015-14.

Insurance company premium acquisition expenses (section 832)—for certain insurance companies, to a safe harbor

method of accounting for premium acquisition expenses set forth in Rev. Proc. 2002-46, 2002-2 C.B. 105. See section 25.01 of

Rev. Proc. 2015-14.

Discounted unpaid losses (section 846)—for insurance companies other than life insurance companies computing

discounted unpaid losses, to the composite method or to alternative methods set forth in Notice 88-100, 1988-2 C.B. 439, and

Rev. Proc. 2002-74, 2002-2 C.B. 980. See section 26.01 of Rev. Proc. 2015-14.

Functional currency (section 985)—to the use of another functional currency for the applicant or its qualified business unit

(QBU), other than a QBU described in Regulations section 1.985-1(b)(1)(iii). See section 29.01 of Rev. Proc. 2015-14.

Rule of 78s (section 1272)—for stated interest on certain short-term consumer loans, from the Rule of 78s method to the

constant yield method. See section 14.05 of Rev. Proc. 2015-14.

Original issue discount (sections 1272 and 1273)—to the principal-reduction method for de minimis original issue discount

(OID). See section 31.01 of Rev. Proc. 2015-14. Note. This change is implemented on a cut-off basis and does not receive

audit protection.

Market discount bonds (section 1278)—from including market discount currently in income for the tax year to which the

discount is attributable to including market discount in income for the tax year of disposition or partial principal payment

(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 32.01 of Rev. Proc. 2015-14.

Interest income on short-term obligations (section 1281)—to currently including accrued interest and discount in income

(to comply with section 1281). See section 33.01 of Rev. Proc. 2015-14.

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 to using the cash method to report such interest. See

section 33.02 of Rev. Proc. 2015-14.

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, to a method that is consistent with Rev. Rul. 91-46. However, the change is

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.

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, to capitalizing such costs in inventory costs under section

263A. See section 11.05 of Rev. Proc. 2015-14.

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, to a method of accounting provided in Regulations sections 1.263(a)-4, 1.263(a)-5, and 1.167(a)-3(b).

Complete Schedule E of Form 3115 for changes to a method of accounting provided in Regulations section 1.167(a)-3(b). See

section 10.05 of Rev. Proc. 2015-14.

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, to a safe harbor method provided under Regulations section 1.446-6(e)(1) or (e)

(2). See Rev. Proc. 2004-30, 2004-1 C.B. 950, and section 27.01 of Rev. Proc. 2015-14.

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 15.05 of Rev. Proc. 2015-14.

Ratable inclusion method for credit card annual fees (section 446)—to the ratable inclusion method for credit card annual

fees. See section 15.05 of Rev. Proc. 2015-14.

Credit card late fees (section 451)—to a method that treats credit card late fees as interest income that creates or increases

OID on the pool of credit card loans to which the fees relate. Note. This change is generally made with audit protection, but has

conditions or limitations. See section 15.06 of Rev. Proc. 2015-14.

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Instructions For Form 3115 (Rev. December 2015) Page 16

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