Instructions For Form 3115 (Rev. December 2015) (Page 18 of 23) in pdf

List of DCNs

No.

Change

113

Payroll tax liabilities (section 461)—for an accrual method applicant that wants to change its method for FICA and FUTA

taxes to the safe harbor method provided in Rev. Proc. 2008-25, 2008-1 C.B. 686, which provides that, solely for the purposes

of the recurring item exception, an applicant will be treated as satisfying the requirement in Regulations section 1.461-5(b)(1)(i)

for its payroll tax liability in the same tax year in which all events have occurred that establish the fact of the related

compensation liability and the amount of the related compensation liability can be determined with reasonable accuracy. See

section 19.04 of Rev. Proc. 2015-14.

114

Rolling-average method of accounting for inventories (sections 471 and 472)—for an applicant required to account for

inventories under section 471 and that uses a rolling-average method to value inventories for financial accounting purposes to

the same rolling-average method to value inventories for federal income tax purposes, in accordance with Rev. Proc. 2008-43,

2008-30 I.R.B.186. See section 21.14 of Rev. Proc. 2015-14. Note. This change must be implemented on a cut-off basis unless

the applicant’s books and records contain sufficient information to compute a section 481(a) adjustment, in which case the

applicant may choose to implement the change with a section 481(a) adjustment.

116

Obsolete. See change number 7.

117

Obsolete. See change number 205 or 206, as applicable.

119

Obsolete. See change number 7.

121

Repairable and reusable spare parts (section 263(a))—to treat certain repairable and reusable spare parts as depreciable

property in accordance with the holding in Rev. Rul. 69-200, 1969-1 C.B. 60, or Rev. Rul. 69-201, 1969-1 C.B. 60. Complete

Schedule E of Form 3115. See section 10.07 of Rev. Proc. 2015-14.

122

Overall accrual method other than for the first section 448 year (section 446)—for a qualifying applicant for other than its

first section 448 year, from the overall cash method to an overall accrual method. Complete Schedule A, Part I, of Form 3115.

Also complete Schedule D, Parts II and III, as applicable. See section 14.01 of Rev. Proc. 2015-14.

123

Change in overall method from the cash method to an accrual method for the first section 448 year (section 446)—

for an applicant that is required by section 448 to change from the overall cash method to an overall accrual method and the

applicant qualifies to make the change under the automatic consent procedures of Regulations sections 1.448-1(g) and (h)(2)

as well as Rev. Proc. 2015-13 for a year of change that is the applicant’s first section 448 year. See Regulations sections

1.448-1(g) and (h)(2), and section 14.01 of Rev. Proc. 2015-14.

124

Change from the cash method to an accrual method for specific items (section 446)—for a qualifying applicant using an

overall accrual method and accounting for one or more identified specific items of income and expense on the cash method to

an accrual method of accounting for the identified specific item or items. See section 14.09 of Rev. Proc. 2015-14.

125

Multi-year service warranty contracts (section 446)—for an eligible accrual method manufacturer, wholesaler, or retailer of

motor vehicles or other durable consumer goods that wants to change to the service warranty income method described in

section 5 of Rev. Proc. 97-38, 1997-2 C.B. 479. See Rev. Proc. 97-38 and section 14.10 of Rev. Proc. 2015-14. Note. This

change is implemented on a cut-off basis.

126

Overall cash method for specified transportation industry taxpayers (section 446)—for “specified transportation

industry taxpayers,” as defined in section 14.11(2) of Rev. Proc. 2015-14, with average annual gross receipts of more than

$10,000,000 and not in excess of $50,000,000 to the overall cash method. See section 14.11 of Rev. Proc. 2015-14.

127

Change to overall cash/hybrid method for certain banks (section 446)—for an eligible bank, as defined in section

14.12(2)(a) of Rev. Proc. 2015-14, to an overall cash/hybrid method described in section 14.12(2)(b) of Rev. Proc. 2015-14.

See section 14.12 of Rev. Proc. 2015-14.

128

Change to overall cash method for farmers (section 446)—for a qualifying applicant engaged in the trade or business of

farming to the overall cash method. See section 14.13 of Rev. Proc. 2015-14. Note. For applicants changing from the crop

method, that portion of the change is implemented using a cut-off method.

129

Nonshareholder contributions to capital under section 118 (section 446)—from excluding from gross income under

section 61 certain payments or the fair market value of property received (including customer connection fees received by a

regulated public utility described in section 118(c)), by characterizing the payments or the fair market value of property as

nontaxable contributions to capital under section 118(a), to including the payments or the fair market value of property in gross

income under section 61. This change also applies to a regulated public utility described in section 118(c) that changes from

including in gross income under section 61 payments or fair market value of property received that are contributions in aid of

construction under section 118(c) and Regulations section 1.118-2 and that meet the requirements of sections 118(c)(1)(B) and

118(c)(1)(C) to excluding from income the payments or the fair market value of the property as nontaxable contributions to

capital under section 118(a). See section 14.14 of Rev. Proc. 2015-14.

130

Retainages not received under long-term contracts (section 451)—for an accrual method applicant’s retainages under

section 451 to a method consistent with the holding in Rev. Rul. 69-314, 1969-1 C.B. 139. This change does not apply to

retainages under long-term contracts as defined in section 460(f). An applicant changing its method of accounting under this

section must treat all retainages (receivables and payables) in the same manner. See section 15.10 of Rev. Proc. 2015-14.

131

Series E, EE, or I U.S. savings bonds (section 454)—for a cash method taxpayer changing the taxpayer’s method of

accounting for interest income on Series E, EE, or I U.S. savings bonds from reporting as interest income the increase in

redemption price on a bond occurring in a tax year to reporting this income in the tax year in which the bond is redeemed,

disposed of, or finally matures, whichever is earliest. A statement in lieu of a Form 3115 is authorized for this change. See

section 16.01 of Rev. Proc. 2015-14. Note. This change is implemented on a cut-off basis.

132

Prepaid subscription income (section 455)—for an accrual method applicant changing its method of accounting for prepaid

subscription income to the method described in section 455 and the related regulations, including an eligible applicant that

wants to make the “within 12 months” election under Regulations section 1.455-2. A statement in lieu of a Form 3115 is

authorized for this change. See section 17.01 of Rev. Proc. 2015-14. Note. This change is implemented on a cut-off basis.

133

Timing of incurring liabilities for bonuses (section 461)—to treat bonuses as incurred in the tax year in which all events

have occurred that establish the fact of the liability to pay a bonus and the amount of the liability can be determined with

reasonable accuracy. See section 19.01(2) of Rev. Proc. 2015-14.

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Instructions For Form 3115 (Rev. December 2015) Page 18

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