Instructions For Form 1128 (Rev. 2014) (Page 6 of 9) in pdf

application, the partnership's or S

the application a separate statement

gross receipts test." The applicant

corporation's annual accounting

signed by the applicant certifying that,

must supply its gross receipts for the

period is an issue under consideration

to the best of the applicant's

most recent 47 months (or for any

in the examination of a partner's or

knowledge, the applicant's annual

predecessor) to compute the

shareholder's federal income tax

accounting period is not an issue

25-percent gross receipts test.

return or an issue under consideration

under consideration by the appeals

1. Prior 3 years gross receipts:

by an area office or by a Federal court

office. The applicant must also

a. Gross receipts from sales and

with respect to a partner's or

provide a copy of the application to

services for the most recent 12-month

shareholder's federal income tax

the appeals officer at the same time it

period that ends with the last month of

return.

files the application with the Service

the requested annual accounting

Center. The application must contain

period are totaled and then divided

Note. If any of the above

the name and telephone number of

into the amount of gross receipts from

circumstances apply, you may still be

the appeals officer.

sales and services for the last 2

eligible under the automatic approval

The applicant is before a Federal

months of this 12-month period.

request procedures if you comply with

court and the applicant's annual

the procedures explained following

b. The same computation as in a,

accounting period is not an issue

item 5 below. See section 7.03 of

above, is made for the two preceding

under consideration by the Federal

Rev. Proc. 2006-46 for more

12-month periods ending with the last

court. The applicant must attach to the

information.

month of the requested annual

application a separate statement

accounting period.

signed by the applicant certifying that,

5. The entity has changed its

annual accounting period at any time

to the best of the applicant's

2. Natural business year:

within the most recent 48-month

knowledge, the applicant's annual

a. Except as provided in b, below,

accounting period is not an issue

period ending with the last month of

if each of the three results described

under consideration by the Federal

the requested tax year. For this

in 1 above equals or exceeds 25

purpose, the following changes are

court. The applicant must also provide

percent, then the requested annual

not considered prior changes in

a copy of the application to the

accounting period is deemed to be the

government counsel at the same time

annual accounting period: (a) a

taxpayer's natural business year.

change to a required tax year or

it files the application with the Service

b. The taxpayer must determine

ownership tax year; (b) a change from

Center. The application must contain

whether any annual accounting period

the name and telephone number of

a 52-53 week tax year to a non-52-53

other than the requested annual

week tax year that ends with

the government counsel.

accounting period also meets the

reference to the same calendar

If the answer to the question on

25-percent test described in a, above.

month, and vice versa; or (c) a

Part II, Section B, line 4, is “No”

If one or more other annual

change in accounting period by an S

because the applicant (or a partner or

accounting periods produce higher

corporation or PSC, in order to comply

shareholder) is under examination

averages of the three percentages

with the common tax year

and has not obtained the appropriate

(rounded to 1/100 of a percent)

requirements of Regulations sections

director's consent to the change or

described in 1 above than the

1.1502-75(d)(3)(v) and 1.1502-76(a).

retention of the applicant's annual

requested annual accounting period,

accounting period or the applicant is

If the answer to the question on

then the requested annual accounting

before an appeals office or Federal

Part II, Section B, line 4, is “Yes,” and

period will not qualify as the

court and the applicant's annual

any of the following situations apply,

taxpayer's natural business year.

accounting period is an issue under

the applicable additional procedures

3. Special rules:

consideration by the appeals office or

described below must be followed.

a. To apply the 25-percent gross

Federal court, do not complete Part III.

The applicant is under examination

receipts test for any particular year,

If the answer to line 4 is “No” solely

and has obtained the consent of the

the taxpayer must compute its gross

because of a prior change as

appropriate director to the change or

receipts under the method of

described in item (5) above, go to Part

retention of the applicant's annual

accounting used to prepare its federal

III after completing Section B.

accounting period. The applicant must

income tax returns for such tax year.

attach to the application a statement

If the answer to line 4 is “Yes” (and

b. If the taxpayer has a

from the director consenting to the

the answer to line 5, 6, or 7 is also

predecessor organization and is

change or retention. The applicant

“Yes”), sign Form 1128 and see Part

continuing the same business as its

must also provide a copy of the

II—Automatic Approval Request

predecessor, the taxpayer must use

application to the director at the same

under Where To File, above. Do not

the gross receipts of its predecessor

time it files the application with the

complete Part III. If the answer to

for purposes of computing the

Service Center. The application must

line 4 is “Yes” (and the answer to

25-percent gross receipts test.

contain the name(s) and telephone

line 5, 6, or 7 is “No”), go to Part III

number(s) of the examination

c. If the taxpayer (including any

after completing Section B.

agent(s).

predecessor organization) does not

Line 6. A partnership, S corporation,

The applicant is before an appeals

have a 47-month period of gross

electing S corporation, or PSC

receipts (36-month period for the

office and the applicant's annual

establishes a "natural business year"

requested tax year plus an additional

accounting period is not an issue

under Rev. Proc. 2006-46 by

under consideration by the appeals

11-month period for comparing the

satisfying the following "25-percent

requested tax year with other potential

office. The applicant must attach to

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Instructions For Form 1128 (Rev. 2014) Page 6

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