Instructions For Form 3115 (Rev. December 2015) (Page 22 of 23) in pdf

List of DCNs

No.

Change

199

Depreciation of leasehold improvements (sections 167, 168, and 197)—for leasehold improvements in which the

applicant has a depreciable interest at the beginning of the year of change, from improperly depreciating or amortizing these

leasehold improvements over the term of the lease (including renewals, if applicable) to properly depreciating or amortizing

these leasehold improvements under section 167(f)(1), 168, or 197, as applicable. Complete Schedule E of Form 3115.

Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See section 6.36 of Rev. Proc.

2015-14.

200

Depreciation of MACRS property (permissible to permissible) (section 168)—for MACRS property, from a permissible

method to another permissible method listed in section 6.37(3) of Rev. Proc. 2015-14. Certain changes are made on a modified

cut-off basis or a cut-off basis. Complete Schedule E of Form 3115. Additionally, a qualified small taxpayer qualifies for a

reduced Form 3115 filing requirement. See section 6.37 of Rev. Proc. 2015-14. Note. A small business taxpayer may qualify to

make certain changes listed in section 6.37(3) of Rev. Proc. 2015-14 on a cut-off basis for its first tax year beginning on or after

January 1, 2014, without filing a Form 3115 under Rev. Proc. 2015-20.

201

Sales-based royalties (section 263A)—for sales-based royalties (as described in Regulations section 1.263A-1(e)(3)(ii)(U)

(2)) properly allocable to inventory property for which the applicant is making a change listed in section 11.11(1) of Rev. Proc.

2015-14. See Rev. Proc. 2014-33 and section 11.11 of Rev. Proc. 2015-14.

202

Sales-based vendor chargebacks under a simplified method (section 263A)—for an applicant changing its method of

accounting to no longer include cost adjustments for sales-based vendor chargebacks (as described in Regulations section

1.471-3(e)(1)) in the formulas used to allocate additional section 263A costs to ending inventory under a simplified method. See

Rev. Proc. 2014-33 and section 11.12 of Rev. Proc. 2015-14.

203

Sales-based vendor chargebacks (section 471)—for an applicant changing its method of accounting to treat sales-based

vendor chargebacks as a reduction in cost of goods sold in accordance with Regulations section 1.471-3(e)(1). See Rev. Proc.

2014-33 and section 21.15 of Rev. Proc. 2015-14.

204

Retail inventory method (section 471)—for an applicant using the retail inventory method, a change to: (a) not adjusting the

numerator of the cost complement for an allowance, discount, or price rebate required by Regulations section 1.471-3(e) to

reduce only cost of goods sold; (b) not adjusting the denominator of the cost complement for temporary markups and

markdowns; (c) computing the cost complement using a method described in Regulations section 1.471-8(b)(3) (including

changes from a method described in section 1.471-8(b)(3) to another method described in that section) for a retail LCM

applicant; or (d) adjusting the denominator of the cost complement for permanent markups and markdowns for a retail cost

applicant. See section 21.16 of Rev. Proc. 2015-14. Note. A taxpayer making any of these changes for its first or second

taxable year after December 31, 2014 may use either a section 481(a) adjustment or a cut-off basis to implement the change.

205

Dispositions of a building or structural component (section 168)—for MACRS property for which the applicant is making

a change listed in section 6.38(3) of Rev. Proc. 2015-14 for disposing of a building or a structural component or disposing of a

portion of a building (including its structural components) to which the partial disposition rule in Regulations section 1.168(i)-8(d)

(1) applies. Complete Schedule E of Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing

requirement. See section 6.38 of Rev. Proc. 2015-14. Note. A small business taxpayer may qualify to make this change on a

cut-off basis for its first tax year beginning on or after January 1, 2014, without filing a Form 3115 under Rev. Proc. 2015-20.

206

Dispositions of tangible depreciable assets (other than a building or its structural components) (section 168)—for

MACRS property for which the applicant is making a change listed in section 6.39(3) of Rev. Proc. 2015-14 for disposing of

section 1245 property or a depreciable land improvement or disposing of a portion of section 1245 property or a depreciable

land improvement to which the partial disposition rule in Regulations section 1.168(i)-8(d)(1) applies. Complete Schedule E of

Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced Form 3115 filing requirement. See section 6.39 of

Rev. Proc. 2015-14. Note. A small business taxpayer may qualify to make this change on a cut-off basis for its first tax year

beginning on or after January 1, 2014, without filing a Form 3115 under Rev. Proc. 2015-20.

207

Dispositions of tangible depreciable assets in a general asset account (section 168)—for MACRS property for which

the applicant is making a change listed in section 6.40(3) of Rev. Proc. 2015-14 for disposing of an asset subject to a general

asset account election. Complete Schedule E of Form 3115. Additionally, a qualified small taxpayer qualifies for a reduced

Form 3115 filing requirement. See section 6.40 of Rev. Proc. 2015-14.

208

Cable network asset maintenance allowance or unit of property method of accounting (section 263(a))—for certain

applicants that operate and have a depreciable interest in cable network assets used in a cable system that provides video,

high speed internet, and VOIP phone services that are changing to (a) the network maintenance allowance method for cable

network assets described in section 5 of Rev. Proc. 2015-12, 2015-2 I.R.B. 265, or (b) the adoption of all, or some, of the units

of property described in section 6 of Rev. Proc. 2015-12, to determine whether expenditures to maintain, replace, or improve

cable network assets must be capitalized under section 263(a). See section 3.21 of Rev. Proc. 2015-14.

209

Cable network customer drops and labor costs associated with installing customer premise equipment (section

263(a))—for certain applicants that operate cable systems and (a) are changing to the specific identification method described

in section 7.01(1) of Rev. Proc. 2015-12, or the safe harbor allocation method described in section 7.01(2) of Rev. Proc.

2015-12 for determining whether customer drop costs (including installations) may be deducted under section 162 or must be

capitalized under section 263(a), or (b) are changing to deducting labor costs associated with installing customer premise

equipment under section 7.02 of Rev. Proc. 2015-12. See section 3.21 of Rev. Proc. 2015-14.

210

Depreciation of fiber optic transfer node and fiber optic cable used by a cable system operator (section 168)—for a

cable system operator within the scope of Rev. Proc. 2015-12 that is changing to the safe harbor method of accounting in

section 8.03 of Rev. Proc. 2015-12 for determining depreciation of a fiber optic transfer node and trunk line consisting of fiber

optic cable used in a cable distribution network providing one-way and two-way communication services. See Rev. Proc.

2015-12 and section 6.42 of Rev. Proc. 2015-14.

211

Bad debt conformity election by bank after previous election automatically revoked (section 166)—for an eligible bank

changing its method of accounting for bad debts by making the conformity election under Regulations section 1.166-2(d)(3)(iii)

(C)(3). See section 4.02 of Rev. Proc. 2015-14.

212

Change to comply with section 163(e)(3)—for a taxpayer changing its method or methods of accounting to comply with the

requirements of section 163(e)(3), which defers certain deductions attributable to original issue discount debt instruments held

by related foreign persons. Any portion of the original issue discount will not be allowable as a deduction to the U.S. person

issuer until paid. See section 5.02 of Rev. Proc. 2015-14.

213

Railroad track structure expenditures (section 263(a))—for a taxpayer changing its method of accounting for track

structures to: (a) the safe harbor method provided in Rev. Proc. 2002-65, 2002-2 C.B. 700; or (b) the safe harbor method

provided in Rev. Proc. 2001-46, 2001-2 C.B. 263. See section 10.12 of Rev. Proc. 2015-14.

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Instructions For Form 3115 (Rev. December 2015) Page 22

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