IRS Extends Five Year Eligibility Limitation

The Internal Revenue Service (“IRS”) issued Notice 2017-6 on December 20, 2016, which extends for one year the five year eligibility limitation period for making automatic accounting method changes to comply with the tangible property regulations.  The five year eligibility limitation, as stated in Revenue Procedure 2015-13, Section 5.01(1)(f), prohibits a taxpayer from filing an automatic accounting method change if the taxpayer made, or requested, a method change for the same item during any of the five years ending with the year of change.  If a taxpayer is prohibited for making an automatic change, the taxpayer must request consent from the IRS to make the method change and  pay a user fee.

IRS Notice 2017-6 

The IRS previously issued Revenue Procedure 2016-29, which temporarily waived the eligibility limitation for changes filed in tax years beginning before January 1, 2016.  The recent Notice applies to tax years beginning before January 1, 2017.  In addition to changes relating to the tangible property regulations, Notice 2017-6 also applies to:

  • Changing from a permissible method to another permissible method of accounting for depreciation property under MACRS;
  • Change in method of accounting for dispositions of a building or structural components;
  • Change in method of accounting for dispositions of tangible depreciable assets other than a building or structural components; and
  • Change in method of accounting for dispositions of tangible depreciable assets in a general asset account.

Taxpayers seeking to make any of these specific accounting method changes should take advantage of this temporary waiver to avoid following the non-automatic procedures that require IRS consent and paying a user fee.  Automatic accounting method changes can be filed on, or before, the extended due date of the tax return with the preparation of Form 3115.

Contact us with questions regarding IRS Notice 2017-6 and visit our tax blog to read more articles on related topics

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2024 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
The Importance of Certified Business Valuation Professionals
Tax, Tax Impact BY Jared Sofranko
IRS Tax-Exempt and Governmental Entity New Compliance Programs
Tax BY Brianna Lundy
Employee Retention Credit: IRS’s Voluntary Disclosure Program Expiring on March 22, 2024
Pillar Two is Here; Is Your Company Ready?
Not-for-Profit, Tax BY Sarah Piot
Not-For-Profit Tax Credit Opportunities Included in the Inflation Reduction Act
Tax BY Taylor Mahan
E-Filing for Form 990-T and Form 1120-POL Temporarily Unavailable
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×