IRS Changes Procedures for Accounting Method Changes for Tangible Property

The Internal Revenue Service has modified the procedures for obtaining its automatic consent to make certain changes in the methods of accounting for amounts paid to acquire, produce or improve tangible property. 

Last September, the IRS and the Treasury Department released a set of long-awaited final regulations for tangible property (see IRS Releases Final Tangible Property Regulations). They include rules for materials and supplies, repairs and maintenance, capital expenditures, and acquisition and production of tangible property. The final regulations require that a taxpayer seeking to change a method of accounting must obtain the consent of the IRS.

Revenue Procedure 2014-16 provides procedures for obtaining an automatic consent to change to a reasonable method of accounting described in Section 1.263A-1(f)(4) of the regulations for self-constructed assets, and a permissible method under Section 263A(b)(2) of the Tax Code and Section 1.263A-3(a)(1) for certain costs related to real property acquired through a foreclosure or similar transaction. 

The new rules modify and clarify Rev. Proc. 2011-14 and supersede Rev. Proc. 2012-19.