The IRS is requesting comments on a proposed revenue procedure,
which, if finalized, would provide automatic consent to certain tax
accounting method changes for revenue made as a result of, or
directly related to, the adoption of the new financial accounting
method standard ASU Topic 606, “Revenue from Contracts with
Under the proposed procedures outlined in Notice
2017-17, taxpayers would request method changes in the same
year they adopt the new financial accounting standards using the
automatic method change procedures (a qualifying same-year method
The proposed procedures provide two alternatives: (1) If the
method change is already in the list of automatic changes in Rev.
Proc. 2016-29 (or its successor) and the taxpayer otherwise meets
certain eligibility requirements in Rev. Proc. 2015-13, the
taxpayer would use the existing procedures in the list of automatic
changes; or (2) if the method change does not meet (1), but does
satisfy certain eligibility requirements in Rev. Proc. 2015-13, and
the proposed method complies with Section 451 or other guidance,
the taxpayer must apply the automatic change procedures in Section
6 of Rev. Proc. 2015-13 (or successor).
The proposed procedure would waive the requirement that the
taxpayer could not have changed the same item during the past five
taxable years and would allow multiple qualifying changes to be
made in one request. However, it does not appear that changes made
under (2) would receive audit protection. The proposed revenue
procedure also requires small businesses to make the changes on a
cut-off basis. Small businesses are defined as each separate and
distinct trade or business of the taxpayer having assets or average
annual gross receipts below $10 million.
The notice containing the proposed revenue procedure also
contains questions for comment concerning both conformity between
the new financial accounting standard and U.S. federal income tax
as well as numerous questions regarding the method change
procedures. Comments are due by July 24, 2017.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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